Purchase Solution

Straight line and Double declining method of depreciation

Not what you're looking for?

Ask Custom Question

Balls and Bats, 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 2 different depreciation schedules for the equipment - one using the double declining method, and the other 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 effect management's choice between these two financial statements?

Purchase this Solution
Solution Summary

In this problem, two different methods of depreciation are used to calculate the amount to be depreciated in the income statement of the company for each year. The net income in a particular year is different for the different deprecation methods. The post further discuss various issues or trade of which management needs to make for deciding which depreciation method is best under the given situation for their firm.

Solution Preview

See the attached file for complete solution. Thanks.

(a) Straight-line
Depreciation rate=(Cost-salvage value) / estimated life
22500
2005 depreciation = $_______________. 22500
2006 depreciation = $_______________. 22500
2007 depreciation = $_______________. 22500
2008 depreciation = $_______________. 22500

(b) ...

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

View More Free Quizzes
Related BrainMass Solutions

  • Financial Management

    //First of all, we will make the depreciation schedule by using both the depreciation methods i.e. double declining balance method and straight line method.

  • Depreciation -straight-line versus double declining-balance

    = $12,440 =$20,000 - $7,560 Answer: Gain using Straight line= $4,200 Double Declining= $12,440 Calculates depreciation expenses using straight-line and double declining-balance depreciation

  • Straight Line, Unit of Production and Double Declining

    The solution contains step by step calculation of depreciation under a Straight line method, b Units of production and c Double declining method with clear working and formulas.It also includes Table showing Amount of depreciation Expense recognized

  • Double - Declining Balance

    The double declining balance depreciation method is like the straight-line method on steroids. To use it, accountants first calculate depreciation as if they were using the straight line method.

  • Computing Depreciation Expense for a Machine

    This solution helps compute depreciation expense for a machine using straight line and double declining methods.

  • Calculating Depreciation

    The solution explains how to calculate depreciation using Straight-line, Sum of the years' digits and Double declining balance method

  • Depreciation

    the depreciation using the straight-line method of depreciation, the units-of-production method of depreciation and the double-declining balance method of depreciation.

  • Depreciation Calculation

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

  • Depreciation Computation

    Depreciation is taken for the portion of the year the asset is used. Determine the depreciation expense and year-end book values for 2006 and 2007 using the Sum-of-the-years'-digits method. Double-declining balance method.

View More Related Solutions