Question
(Depreciation for Partial Period--SL, SYD, and DDB) Alladin Company purchased Machine #201 on May 1, 2014. The following information relating to Machine #201 was gathered
(Depreciation for Partial Period--SL, SYD, and DDB)
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Alladin Company purchased Machine #201 on May 1, 2014. The following information relating to Machine #201 was gathered at the end of May.
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It is expected that the machine could be used for 10 years, after which the salvage value would be zero. Alladin intends to use the machine for only 8 years, however, after which it expects to be able to sell it for $1,500. The invoice for Machine #201 was paid May 5, 2014. Alladin uses the calendar year as the basis for the preparation of financial statements.
Instructions
(a) | Compute the depreciation expense for the years indicated using the following methods. (Round to the nearest dollar.)
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(b) | Suppose Kate Crow, the president of Alladin, tells you that because the company is a new organization, she expects it will be several years before production and sales reach optimum levels. She asks you to recommend a depreciation method that will allocate less of the company's depreciation expense to the early years and more to later years of the assets' lives. What method would you recommend? |
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