A firm owns an equipment purchased at the beginning of the 2019 fiscal year at the price of $50,000. The equipment has 3 years remaining life, and is expected to be sold for $8000 at the end of it life (the annual interest rate is 5%). (a) Calculate the annual depreciation, to 2 decimal places, in the 2019, 2020 and 2021 fiscal years using the straight line method. (b) Calculate the annual depreciation, to 2 decimal places, in the 2019, 2020 and 2021 fiscal years using the reducing balance method. (c) Which method above gives less depreciation in the 2019 fiscal year? and which method above gives less depreciation in the 2021 fiscal year? Briefly explain why the answers for these two fiscal years are different (or are not different).

A firm owns an equipment purchased at the beginning of the 2019 fiscal year at the price of $50,000. The equipment has 3 years remaining life, and is expected to be sold for $8000 at the end of it life (the annual interest rate is 5%). (a) Calculate the annual depreciation, to 2 decimal places, in the 2019, 2020 and 2021 fiscal years using the straight line method. (b) Calculate the annual depreciation, to 2 decimal places, in the 2019, 2020 and 2021 fiscal years using the reducing balance method. (c) Which method above gives less depreciation in the 2019 fiscal year? and which method above gives less depreciation in the 2021 fiscal year? Briefly explain why the answers for these two fiscal years are different (or are not different).

Name: A firm owns an equipment purchased at the beginning of the 2019 fisca
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Description: A firm owns an equipment purchased at the beginning of the 2019 fiscal year at the price of$50,000. The equipment has 3 years remaining life, and is expected to be sold for $8000 at the endof it life (the annual interest rate is 5%).(a) Calculate th

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...

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