Identifying Depreciation Methods and Preparing Schedules

Veto Company bought equipment on January 1, 2020, for $63,000. The expected life is 10 years, and the residual value is $7,000. Based on three acceptable depreciation methods, the annual depreciation expense and balance of accumulated depreciation at the end of 2020 and 2021 are shown below.

	Case A		Case B		Case C
Year	Annual Expense	Accumulated Amount	Annual Expense	Accumulated Amount	Annual Expense	Accumulated Amount
2020	$12,600	$12,600	$5,600	$5,600	$10,182	$10,182
2021	10,080	22,680	5,600	11,200	9,163	19,345

Required

a. Identify the depreciation method used in each case A, B, and C.

b. Based on the answer to part a, prepare a depreciation schedule that shows annual depreciation expense and year-end accumulated depreciation and book value over the life of the asset for each case A, B, and C.

c. Which method results in the highest net income in year 1?

d. Which method results in the highest net income in year 10?

• Identification of Method
• Case A Depreciation Schedule
• Case B Depreciation Schedule
• Case C Depreciation Schedule
• Analysis

b. Based on the answer to part a, prepare a depreciation schedule that shows annual depreciation expense and year-end accumulated depreciation and book value over the life of the asset for each case A, B, and C.

Note: Carry all decimals in calculations; round the final answers in the table below to the nearest dollar.

Case A:

	For the Period	End of Period
Reporting Period	Depreciation Expense	Accumulated Depreciation	Book Value
Jan. 1, 2020			Answer
Dec. 31, 2020	Answer	Answer	Answer
Dec. 31, 2021	Answer	Answer	Answer
Dec. 31, 2022	Answer	Answer	Answer
Dec. 31, 2023	Answer	Answer	Answer
Dec. 31, 2024	Answer	Answer	Answer
Dec. 31, 2025	Answer	Answer	Answer
Dec. 31, 2026	Answer	Answer	Answer
Dec. 31, 2027	Answer	Answer	Answer
Dec. 31, 2028	Answer	Answer	Answer
Dec. 31, 2029	Answer	Answer	Answer

b. Based on the answer to part a, prepare a depreciation schedule that shows annual depreciation expense and year-end accumulated depreciation and book value over the life of the asset for each case A, B, and C.

Note: Round each amount in the table to the nearest whole number.

Case B:

	For the Period	End of Period
Reporting Period	Depreciation Expense	Accumulated Depreciation	Book Value
Jan. 1, 2020			Answer
Dec. 31, 2020	Answer	Answer	Answer
Dec. 31, 2021	Answer	Answer	Answer
Dec. 31, 2022	Answer	Answer	Answer
Dec. 31, 2023	Answer	Answer	Answer
Dec. 31, 2024	Answer	Answer	Answer
Dec. 31, 2025	Answer	Answer	Answer
Dec. 31, 2026	Answer	Answer	Answer
Dec. 31, 2027	Answer	Answer	Answer
Dec. 31, 2028	Answer	Answer	Answer
Dec. 31, 2029	Answer	Answer	Answer

b. Based on the answer to part a, prepare a depreciation schedule that shows annual depreciation expense and year-end accumulated depreciation and book value over the life of the asset for each case A, B, and C.

Note: Carry all decimals in calculations; round the final answers in the table below to the nearest dollar.

Case C:

	For the Period	End of Period
Reporting Period	Depreciation Expense	Accumulated Depreciation	Book Value
Jan. 1, 2020			Answer
Dec. 31, 2020	Answer	Answer	Answer
Dec. 31, 2021	Answer	Answer	Answer
Dec. 31, 2022	Answer	Answer	Answer
Dec. 31, 2023	Answer	Answer	Answer
Dec. 31, 2024	Answer	Answer	Answer
Dec. 31, 2025	Answer	Answer	Answer
Dec. 31, 2026	Answer	Answer	Answer
Dec. 31, 2027	Answer	Answer	Answer
Dec. 31, 2028	Answer	Answer	Answer
Dec. 31, 2029	Answer	Answer	Answer

c. Which method results in the highest net income in year 1?	AnswerDouble-declining-balance depreciation method, Straight-line depreciation method, Sum-of-the-years'-digits depreciation method, Units-of-production depreciation method
d. Which method results in the highest net income in year 10?	AnswerDouble-declining-balance depreciation method, Straight-line depreciation method, Sum-of-the-years'-digits depreciation method, Units-of-production depreciation method