Valley, Inc., purchased a new machine on October 1 of the 2020 at a cost of $118,000. The machine's estimated useful life at the time of the purchase was 5 years, and its residual value was $16,000.The company reports on a calendar year basis.Prepare a complete depreciation schedule, beginning with the 2020, under each of the following methods listed (assume that the half-year convention is used).a- Straight-line.b- 200 percent declining-balance.c- 150 percent declining-balance, switching to straight-line when that maximizes the expense.d- Which of the three methods computed in part a is most common for financial reporting purposes? Explain.

There may come a point in time where the straight-line method results in a higher depreciation…

Answered: a- Straight-line. b- 200 percent…

a- Straight-line. b- 200 percent declining-balance. c- 150 percent declining-balance, switching to straight-line when that maximizes the expense.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Valley, Inc., purchased a new machine on October 1 of the 2020 at a cost of $118,000. The machine's estimated useful life at the time of the purchase was 5 years, and its residual value was $16,000.
The company reports on a calendar year basis.
Prepare a complete depreciation schedule, beginning with the 2020, under each of the following methods listed (assume that the half-year convention is used).
a- Straight-line.
b- 200 percent declining-balance.
c- 150 percent declining-balance, switching to straight-line when that maximizes the expense.
d- Which of the three methods computed in part a is most common for financial reporting purposes? Explain.

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