On January 2 2015 Jatson Corporation acquired a new machine

On January 2, 2015, Jatson Corporation acquired a new machine with an estimated useful life of five years. The cost of the equipment was $40,000 with an estimated residual value of $5,000.

Prepare a complete depreciation table under the straight-line method. Assume that a full year of depreciation was taken in 2015.

Prepare a complete depreciation table under the 200 percent declining-balance method. Assume that a full year of depreciation was taken in 2015.

Prepare a complete depreciation table under the 150 percent declining-balance with a switch to straight-line when it will maximize depreciation expense. Assume that a full year of depreciation was taken in 2015.

Solution

Straight line method

Depreciation =cost-residue=40000-5000=35000

decline method

Depreciation cost=40000-2(5000)=30000