On January 5, 2016, Parker Company purchased a new $650,000 machine with five-year useful life and an

Question:

On January 5, 2016, Parker Company purchased a new $650,000 machine with five-year useful life and an estimated salvage value of $50,000.

INSTRUCTIONS

Prepare a schedule showing the annual depreciation and accumulated depreciation for each of the first three years of the asset's life under

(1) The straight-line method,

(2) The sum-of-the-years'-digits method, and

(3) The double-declining-balance method.

Analyze: If the double-declining-balance method is used, what would be the book value of the machine at the end of 2017?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...