Port Townsend Cedar Company acquired a saw for $34,000 with an expected useful life of 5 years and a $2,000 expected residual value. Prepare a tabular comparison (similar to Exhibit of the annual depreciation and book value for each year under straight-line and DDB depreciation. If these two methods were available for tax reporting purposes, which would a company prefer to use?

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Declining-Balance at Twice the Straight-Line Rate (DDB)T Modified DDB-Depreciation Schedule Adjustment in Year 4 Straight-Line* Book Value $41,000 20,500 10,250 Annual Depreciation Book Value Depreciation Annual Book Value $41,000 20,500 10,250 5,125 2,562 Annual Depreciation $41,000 At acquisition Year 1 Year 2 Year 3 Year 4 Total $10,000 10,000 10,000 10,000 $40,000 31,000 $20,500 21,000 10,250 5,125 2,563 $38,438 $20,500 10,250 5,125 4,125 $40,000 11,000 1,000 5,125 1,000