Determine the depreciation of the equipment with a cost of 560,000.00 For a period of 6years...

Determine the depreciation of the equipment with a cost of 560,000.00

For a period of 6years life the salvage value is 5% of the cost. use 3 methods of depreciation. If you want to resale the machine on the 3rd year which method you will use and why.

Expert Solution

Answer:

If I want to resale at the end of 3rd year, I shall use Double declining balance.

Reason: As depreciation is tax deductible, I would like to choose the method which gives maximum tax benefit in first 3 years. The accumulated depreciation under double declining balance at the end of year 3 is maximum at $394,074.07

ekkarill92 answered 4 months ago

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