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Swanson & Hiller, Inc., purchased a new machine on September 1, 2008, at a cost of $118,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $6,000.
a 1.
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Prepare a complete depreciation schedule, beginning with calendar year 2008, using the straight line method (assume that the half year convention is used). (Omit the “$” sign in your response.)
a 2. Prepare a complete depreciation schedule, beginning with calendar year 2008, using the 200 percent declining balance schedule method (assume that the half year convention is used). (Round your answers to the nearest dollar amount. Omit the “$” sign in your response.)
a 3. |
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Prepare a complete depreciation schedule, beginning with calendar year 2008, using the 150 percent declining balance schedule method, switching to straight line when that maximizes the expense (assume that the half year convention is used). (Round your answers to the nearest dollar amount. Omit the “$” sign in your response.)
| b. |
Which of the three methods computed in part a is most common for financial reporting purposes? |
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150 percent declining balance method. |
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200 percent declining balance method. |
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Straight line method.
| c. |
Assume that Swanson & Hiller sells the machine on December 31, 2011, for $27,000 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods used in part a. (Loss amounts should be indicated by a minus sign. Omit the “$” sign in your response.)
Straight line
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200 percent declining balance.
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150 percent declining balance.
