Explore BrainMass

# Depreciation Calculation

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

I am reviewing the calculation of depreciation in preperation of my next class. I want to see if I am on track with my calculations and responses.

K J Inc purchased equipment on January 1, 2005, at a cost of \$100,000. The estimated useful life is 4 years with a salvage value of \$10,000.

Prepare two different depreciation schedules for the equipment:

a. One using the double-declining balance method (round to the nearest dollar)
b. One using the straight-line method (round to the nearest dollar)

Determine which method would result in the greatest net income for the year ending December 31, 2005.

How would taxes affect management's choice between these two methods for the financial statement?

#### Solution Preview

The depreciation schedules are in the attached file. The double declining method has a higher depreciation in the initial years as compared to straight line method. ...

#### Solution Summary

The solution explains the straight line method and double declining balance method of calculating depreciation

\$2.49