Computing and recording straight-line versus double-declining-balance depreciationAt the b...

Computing and recording straight-line versus double-declining-balance depreciation

At the beginning of 2011, Precision Manufacturing purchased a new computerized drill press for $50,000. It is expected to have a five-year life and a $5,000 salvage value.

Required

a. Compute the depreciation for each of the five years, assuming that the company uses

(1) Straight-line depreciation.

(2) Double-declining-balance depreciation.

b. Record the purchase of the drill press and the depreciation expense for the first year under the straight-line and double-declining-balance methods in a financial statements model like the following one:

c. Prepare the journal entries to recognize depreciation for each of the five years, assuming that the company uses

(1) Straight-line depreciation.

(2) Double-declining-balance depreciation.