Question

Alladin Company purchased Machine #201 on May 1, 2017. The following information relating to Machine '20 Price Credit terms Freight-in Preparation and installation costs Labor costs during regular production operations $10,500 was gathered at the end of May $85,000 2/10, n/30 800 3,800 s expected that the machine could be used or 10 years, ater which the salva va e would be r r Alldinntends to use the he e r w r i h e e, a e·th s ine to be able to sell it for $1,500. The invoice for Machine #201 was paid May 5 2017. Alalin ues the calendar yer the bell tr the preparaton of rinnad statements Compute the depreciation expense for the years indicated using the following methods Depreciation Expense (1) Straight-line method for 2017 (2) Sum-of-the-years-digits method for 2018 (3) Double-declining balance method for 2017 Suppose Kate Crow, the president of Alladin, tells you that because the company is a new crganization, she expects it will be several years before production and sales reach optimum levels. She asks you to recommend a depreciation method that will alocate less of the company's depreciation expense to the early years and more to later years of the assets lives. What method would you recommend?

Answer 1