Question

On January 1 of 2018, a company acquired and placed in service a machine at a...

On January 1 of 2018, a company acquired and placed in service a machine at a cost of $162,000. It has been estimated that the machine has a service life of six years and no salvage value.

Required:

  1. Calculate the depreciation expense using the double declining balance method for the first two years.
  2. Calculate the depreciation expense using the straight line method for the first two years
  3. Which method will result on higher net income for the first year of operation, explain your answer?
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