Roblez Corporation purchased machine upon Jan 1, 2010, during the price of
$250,000. The estimated utilitarian hold up of the machine is 4 years, with an estimated resid-
ual worth during the finish of which duration of $10,000. The association is deliberation opposite de-
preciation methods which could be used for monetary stating purposes.
Instructions
(a) Prepare apart debasement schedules for the machine regulating the straight-line
method, as well as the declining-balance process regulating stand in the straight-line rate. Round
to the nearest dollar.
(b) Which process would outcome in the aloft reported 2010 income? In the top to-
tal reported income over the 4-year period?
(c) Which process would outcome in the reduce reported 2010 income? In the lowest sum
reported income over the 4-year period?
CAN YOU HELP ME RESOLVE THIS PROBLEM IN FINANCIAL ACCOUNTING?ANY TIP IS WELCOME?
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{ 1 comment… read it below or add one }
It has been a while since i have looked at depreciation but here is goes…and thanks for the refresher…
Straight Line
(250,000 – 10,000)/4 years = 60,000 depreciation per year
Double Declining Balance (1/4 = 25% x 2 = 50%)
Year 1 250,000 x .50 = 125,000
Year 2 125,000 x .50 = 62,500
Year 3 62,500 x .50 = 31,250
Year 4 31,250 x .50 = 15,625
b.) The item that will result in the higher reported 2010 income is the lower depreciation amount which would be straight line. For the for year period the lowest amount would be declining balance.
c.) opposite of b.
This is pretty basic stuff (rusty on the declining balance so you might want to crack the book to review).