Strong Metals Inc. purchased a new stamping machine at the beginning of the year. Strong estimated the residual value to be $50,000, the useful life to be five years, and the productive life to be 300,000 units. You are hired as a consultant to assist Strong's management with understanding the impact of each depreciation method to assist the management team in selecting a method to apply for the new machine

Assuming a 25 percent tax rate, what would be the difference in taxes paid in Year 4 between applying the double-declining-balance method compared to applying the straight-line method?

Straight Line Depreciation

	Depreciation Expense	accumulated depreciation	net book value
acquisition cost:			950,000
year 1	180,000	180,000	770,000
year 2	180,000	360,000	590,000
year 3	180,000	540,000	410,000
year 4	180,000	720,000	230,000
year 5	180,000	900,000	50,000

Double Declining Balance

	Depreciation Expense	accumulated depreciation	Net book Value
At acquisition			950,000
Year 1	380,000	380,000	570,000
year 2	228,000	606,000	342,000
year 3	136,800	744,800	205,300
year 4	82,080	826,880	123,120
year 5	73,120	900,000	50,000