Reference no: EM132860210

Question - Swanson & Hiller, Inc., purchased a new machine on September 1 of the current year at a cost of $109,000. The machine's estimated useful life at the time of the purchase was five years, and its residual value was $9,000. The company reports on a calendar year basis.

 Required -

a-1. Complete depreciation schedule, beginning with the current year, using the straight-line method. (Assume that the half year convention is used).

a-2. Complete depreciation schedule, beginning with the current year, using the 200 percent declining-balance method. (Assume that the half-year convention is used).

a-3. Complete depreciation schedule, beginning with the current year, using the 150 percent declining-balance, switching to straight-line when that maximizes the expense. (Assume that the half-year convention is used).

b. Which of the three methods computed in part a is most common for financial reporting purposes?

c. Assume that Swanson & Hiller sells the machine on December 31 of the fourth year for $29,000 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods used in part a.