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On August 3 , Franko Construction purchased special - purpose equipment at a cost of $ 8 , 9 0 0 , 0 0 0
On August Franko Construction purchased specialpurpose equipment at a cost of $ The useful life of the equipment was estimated to be eight years, with an estimated residual value of $
Required:
Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straightline depreciation method halfyear convention
Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the percent decliningbalance method halfyear convention with a switch to straightline when it will maximize depreciation expense.
Which of these two depreciation methods straightline or doubledecliningbalance results in the highest net income for financial reporting purposes during the first two years of the equipments use?
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