Problem

Income effects of depreciation methods Tory Enterprises pays $238,400 for equipment tha...

Income effects of depreciation methods

Tory Enterprises pays $238,400 for equipment that will last five years and have a $43,600 salvage value. By using the machine in its operations for five years, the company expects to earn $88,500 annually, after deducting all expenses except depreciation. Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming (1) straight-line depreciation and (2) double-declining-balance depreciation.

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