Changing Depreciation The Kam Company purchased a machine on January 2, 2007 for $20,000. The machine had an expected life of eight years and a residual value of $300. The double declining balance method of depreciation is used.
Required
1. Compute the depreciation for each year of the asset’s life.
2. Assuming that the company has a policy of always changing to the straight line method at the midpoint of the asset’s life, compute the depreciation for each year of the asset’s life.
3. Assuming that the company always changes to the straight line method at the beginning of the year when the annual straight line amount exceeds the double declining balance amount, compute the depreciation for each year of the asset’s life.