Business, 11.06.2020 17:57 random286

Some construction company has bought a product for $200,000 with a life of three years, and a salvage value of $10,000. Tabulate depreciation and book value using MACRS, Double Declining Balance and straight-line methods. Which method gives the company the largest depreciation after two years?

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Answer from: jose477

The method that gives the company the largest depreciation after two years is MACRS.

Explanation:

According to given data Under MACS depreciation would be provided for 4 years and the salvage value of the asset would be reduced to zero .

Year depreciation rateDeprecation Book value at the end of the year

133.33% 66660 (33.33 % of 200000) 133340

244.45% 88900 (44.45 % of 200000)44440

314.81% 29620 (14.81 % of 200000) 14820

47.41% 14820 (7.41 % of 200000) 0

Straight line method

The amount of depreciation remains same for three years. The depreciation amount is calculated as

=Original cost- Salvage value / life

= 200000-10000 /3

= 63333.3 $

YearDepreciationBook value at the end of the year

1 63333.33 136666.7

2 63333.33 73333.34

3 63333.33 10000.01

Double declining balance method

Under this method the depreciation is charged at double the rate of straight line method .

Depreciation rate under SLM = 100% / 3 = 33.33 %

DDB method rate = 2* 33.33% = 66.66%

Year Book value at the beginning DepreciationBook value at the end

1200000 133320 (66.66% of 200000)66680

266680 44448.89 (66.66% of 66680)22231.11

322231.11 14819.26 (66.66% of 22231.11)7411.853

The largest depreciation is given by MACRS method after two years which is 88900

Answer from: Quest

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.

Answer from: Quest

3rd the reason why is because of management and leadership

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