Textbook Problem

Kam Company purchased a machine on January 2, 2019, for $20,000. The machine had an expected life of 8 years and a residual value of $300. The double-declining-balance method of depreciation is used.

Required:

1. 1. Compute the depreciation expense for each year of the asset’s life and book value at the end of each year.
2. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the asset’s life, compute the depreciation expense for each year of the asset’s life.
3. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the asset’s life.