Question
Megan Corporation purchased machinery on January 1, 2017, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an
Megan Corporation purchased machinery on January 1, 2017, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $30,000. The company is considering different depreciation methods that could be used for financial reporting purposes.
Instructions
(a) Prepare separate depreciation schedules for the machinery using the straightline method, and the decliningbalance method using double the straightline rate. (Round to the nearest dollar.)
(a) Doubledecliningbalance expense 2019 $31,250
(b) Which method would result in the higher reported 2017 income? In the highest total reported income over the 4year period?
(c) Which method would result in the lower reported 2017 income? In the lowest total reported income over the 4year period? (Kimmel 468-469)
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