Benick Industries purchased a new lathe on January 1, 1996, for $300,000. Benick estimates that the lathe will have a useful life of four years and that the company will be able to sell it at the end of the fourth year for $60,000. REQUIRED:

a. Compute the depreciation expense that Benick Industries would record for 1996, 1997, 1998, and 1999 under each of the following methods: (1) Straight-line depreciation (2) Sum-of-the-years’-digits depreciation (3) Double-declining-balance depreciation

b. If you were the president of Benick Industries, what might you consider when choosing a depreciation method for financial reporting purposes? Why?