Choice Among Depreciation Methods

Walnut Ridge Production Inc. purchased a new computerized video-editing machine at a cost of $370,000. The system has a residual value of $54,500 and an expected life of 5 years.

Required:

1. Compute depreciation expense, accumulated depreciation, and book value for the first 3 years of the machine's life using:

a. The straight-line method.

End of Year	Depreciation Expense	Accumulated Depreciation	Book Value
			$fill in the blank 1
1	$fill in the blank 2	$fill in the blank 3	fill in the blank 4
2	fill in the blank 5	fill in the blank 6	fill in the blank 7
3	fill in the blank 8	fill in the blank 9	fill in the blank 10

b. The double-declining-balance method.

End of Year	Depreciation Expense	Accumulated Depreciation	Book Value
			$fill in the blank 11
1	$fill in the blank 12	$fill in the blank 13	fill in the blank 14
2	fill in the blank 15	fill in the blank 16	fill in the blank 17
3	fill in the blank 18	fill in the blank 19	fill in the blank 20

2. Which method would produce the largest income in the first, second, and third years of the asset's life?

Year	Method
First year	Straight-line methodDouble-declining-balance method
Second year	Straight-line methodDouble-declining-balance method
Third year	Straight-line methodDouble-declining-balance method