Accounting

1-2 pages

Consider the following scenario:

Balls and Bats, Inc. purchased equipment on January 1, 2005, at a cost of $100,000. The estimated useful life is 4 years with a salvage value of $10,000.

Complete the following tasks for this assignment:

1. Prepare two different depreciation schedules for the equipment—one using the double-declining balance method, and the other using the straight-line method. (Round to the nearest dollar).

2. Determine which method would result in the greatest net income for the year ending December 31, 2005.

3. How would taxes affect management’s choice between these two methods for the financial statements?

Instructions:

Please put your calculations in Excel and submit an excel document for this assignment. There have been some issues with transference to word and the transmission process when submitted.

Instructor's Comments:

Please note this assignment does NOT have a tax calculation on it. For question 3 it is a theoretical application. If you would like to see the impact to formulate your answer, you may use any tax percentage you want but do not put it in the calculations only use it to visualize what may happen for question number 3.