a. Waller Company purchased equipment for $24,000. The company is considering wh
ID: 2379284 • Letter: A
Question
a. Waller Company purchased equipment for $24,000. The company is considering whether to determine annual depreciation using the straight-line method or the declining-balance method at 150 percent of the straight-line rate. Waller expects to use the equipment for 10 years, at the end of which it will have an estimated salvage value of $4,000.
Prepare a comparison of these two alternatives for the first two years Waller will own the equipment. (Omit the "$" sign in your response.)
Year 1 Year 2
Straight-line depreciation YEAR 1 1. $ ______ YEAR 2 2. $__________
150% declining-balance depreciation YEAR 1 3. $_______ YEAR 2 4.$ _________
TOTAL FOR YEAR 1 5. $ _______ TOTALY FOR YEAR 2 6. $__________
Explanation / Answer
Straight-line depreciation
Depreciation each year = (24,000-4000)/10 =$2000
Straight-line depreciation 1. $$2000 2. $2000
150% declining-balance depreciation
150% declining-balance depreciation 1. $3600 2. $3060
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