a. Waller Company purchased equipment for $24,000. The company is considering wh

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                                    1. $ ______              2. $__________

  150% declining-balance depreciation     3. $_______           4.$ _________

                                                                           5.  $ _______          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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