Veto Company bought equipment on January 1 for $99,000. The expected life is 10 years, and the residual value is $11,000. Based on three acceptable depreciation methods, the company computes annual depreciation expense and the balance of accumulated depreciation at the end of first and second years as follows.

	Case A		Case B		Case C
	Depreciation	Accumulated	Depreciation	Accumulated	Depreciation	Accumulated
Year	Expense	Depreciation	Expense	Depreciation	Expense	Depreciation
Year 1	$19,800	$19,800	$8,800	$8,800	$16,001	$16,001
Year 2	15,840	35,640	8,800	17,600	14,399	30,400

Required
a. Identify the depreciation method used in each case A, B, and C.
b. Prepare a depreciation schedule that shows annual depreciation expense, and year-end accumulated depreciation and book value, over the life of the asset for each case A, B, and C.
c. Which method results in the highest net income in Year 1?
d. Which method results in the highest net income in Year 10?

Answer rating: 100% (QA)

a The depreciation method used in each case is as follows Case A Straightline depreciation method Case B Doubledeclining balance depreciation method Case C Sumoftheyears digits depreciation method b D... View the full answer