Question

HOLLAN (b) If machine 2 was purchased on April 1 instead of July 1, what would be the depreciat this machine in 20167 In 2017? Compure depreciation under different methods. (LO 2,6), AP "P9-9A 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 $39.000. 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 straight-line method, and the declining-balance method using double the straight-line rate. (Round to the nearest dollar.) Double-declining-balance expense 2019 $31,250 (b) Which method would result in the higher reported 2017 income? In the highest total reported income over the 4-year period? (e) Which method would result in the lower reported 2017 income? In the lowest total reported income over the 4-year period? Version 4.24.16.2 2002 Wiley Sons, Inc. All Rights Reserved. A Division of John Wiley. In

Answer 1

Answer:- Given data, cost = Cost = $ 250,000 25 Salvage value = $30,000 usefu lilc 4 years (a) depreciation per annum cost-salvage value usefu like as per straighl- line method 250,000 - 39000 = $ 55000 per annum Ending уем beginning bod value depreciation Expense book value 53000 2017 $ 250,000 $ 195,000 140,000 85000 55000 2018 195000 55000 140,000 30,000 2019 S5000 85000 2020 $ 220,000 x Coo Depreciation rate as per straight line method = useful life 4 Xloo = 25061 . Double declining route = 2x25ch -50%

beginning book value depreciation spenge Ending book valul year 125,000 2017 250,000 125,000 (250,000 X 30) 62,500 68,500 2018 125,000 (125700 X5091) 312 62 DO 2019 зі аут (62500 USD (-) 2020 31250 15625. 15625 (31250 X500) $ 234,375 Straight line method would result in the higher reported lower depreciation Expense. he in 2017. Because it hay b need totte en te yra pemod also strought a depreciation for the four year period the lowest amount would be declining balance method. Declining balance method would result in the lowest reported un come in 2017. Because of hay highest depreciation Expense. depreciation For the 4-year period, the highest amount would be in double decling balance Hvdicht EA method. Therefore, it is the lowest reported Income OVC1 the 4-year period. Thanky