Kiram Corporation purchased machinery on January 1, 2012, at a cost of $350,000. The estimated useful life of the machinery is 5 years, with an estimated salvage value at the end of that period of $20,000. The company is considering different depreciation methods that could be used for financial reporting purposes.
Instructions
(a) Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.
(b) Which method would result in the higher reported 2012 income? In the higher total reported income over the 5-year period?
(c) Which method would result in the lower reported 2012 income? In the lower total reported income over the 5-year period