Critical Thinking Decision Making Across the Organization BYP10-4 Reimer Company and Lingo Company are two proprietorships that are similar in many re- spects. One difference is that Reimer Company uses the straight-line method and Lingo Company uses the declining-balance method at double the straight-line rate. On January 2, 2010, both companies acquired the depreciable assets shown on page 502. 502 10 Plant Assets, Natural Resources, and Intangible Assets 40 years 10 years Asset Cost Salvage Value Useful Life Buildings $320,000 $20,000 Equipment 110,000 10,000 Including the appropriate depreciation charges, annual net income for the companies in the years 2010, 2011, and 2012 and total income for the 3 years were as follows. 2010 2011 2012 Total Reimer Company $84,000 $88.400 $90,000 $262.400 Lingo Company 68,000 76,000 85,000 229,000 At December 31, 2012, the balance sheets of the two companies are similar except that Lingo Company has more cash than Reimer Company. Sally Vogts is interested in buying one of the companies. She comes to you for advice. Instructions With the class divided into groups, answer the following. (a) Determine the annual and total depreciation recorded by each company during the 3 years. (b) Assuming that Lingo Company also uses the straight-line method of depreciation instead of the declining-balance method as in (a), prepare comparative income data for the 3 years. (c) Which company should Sally Vogts buy? Why