Hints: Book value at acquisition equals total asset cost. Under each method, the book values will be identical at the end of year 5.
On Janaury 2, 2015, Wilbey corp. paid $240,000 for a computer system. In addition to the base purchase price, the company paid a setup fee of $2,900, $12,000 sales tax, and $3,100 for a special platform on which to place the computer. Wilbey's management estimates that the computer will remain in service 5 years and have a residual value of $28,000. It is estimated that the computer will process 50,000 documents the first year, with annual processing decreasing by 5,000 documents during each of the next 4 years (that is, 45,000 documents in 2013, 40,000 documents in 2014; and so on). In trying to decide which depreciation method to use, the Controller has requested a projected depreciation schedule for each of the 3 depreciation methods (straight line, double declining balance and units of production). QA. For each of the generally accepted depreciation methods, prepare schedule showing, at minimim; asset cost, depreciation expense, accumulated depreciation and asset book value for each year. Sample schedules follow. QB. Wilbey corp. reports to stockholders and creditors in the financial statements using the depreciation method that maximizes reported income in the early years of asset use. Which depreciation method would Wilbey use to accomplish this goal?
Depreciation Schedules
Straight-Line Depreciation Schedule
	Asset Cost	Salvage Value	Depreciable Basis	Depreciation Expense	Accumulated Depreciation	Book Value
			-	N/A	N/A	-
Double-declining Balance (DDB) Depreciation Schedule
	Asset Cost	Salvage Value	Depreciable Basis	Depreciation Expense	Accumulated Depreciation	Book Value
			-	N/A	N/A	-
Units of Production Depreciation Schedule
Units of Production	Asset Cost	Salvage Value	Depreciable Basis	Depreciation Expense	Accumulated Depreciation	Book Value
			-	N/A	N/A	-
50,000
45,000
40,000
35,000
30,000
Which method maximizes reported Net Income in the early years?