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Depreciation Method

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Balls and Batts , Inc .purchased equipment on January1, 2005 ,at a cost of $100,000.The estimated usefull life is 4 years with a salvage value of $10,000. Complete the following tasks:

Prepare 2 different depreciation schedules for the equipment --one using the double-declining balance 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 affect mangement's choice between these 2 methods for the financial statements ?

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Solution Summary

The solution explains the depreciation calculation for double declining balance method and straight line depreciation. It also explains the impact on net income and taxes of these methods.

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