Changing Depreciation
Response to the following problem:
The Kam Company purchased a machine on January 2, 2010, for $20,000. The machine had an expected life of eight years and a residual value of $300. The double-declining-balance method of depreciation is used.
Required
1. Compute the depreciation for each year of the asset's life.
2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the asset's life, compute the depreciation for each year of the asset's life.
3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straightline amount exceeds the double-declining-balance amount, compute the depreciation for each year of the asset's life.