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The figures that follow to give the answer Method A Straight-Line Method B Double-Declining-Balance Year Annual Depreciation Expense Accumulated Depreciation Book Value Annual Depreciation

The figures that follow to give the answer:

 

 

Method A: Straight-Line

Method B: Double-Declining-Balance

Year

Annual Depreciation Expense

Accumulated Depreciation

Book Value

Annual Depreciation Expense

Accumulated Depreciation

Book Value

Start

   

$44,000

   

$44,000

20X7

$4,000

$ 4,000

40,000

$8,800

$ 8,800

35,200

20X8

4,000

8,000

36,000

7,040

15,840

28,160

20X9

4,000

12,000

32,000

5,632

21,472

22,528

Required

1. Suppose the income tax authorities permitted a choice between these 2 depreciation methods. Which method would FedEx select for income-tax purposes? Why?

2. Suppose FedEx purchased the equipment described in the table on January 1, 20X7. Management has depreciated the equipment by using the double-declining-balance method. On July 1, 20X9, FedEx sold the equipment for $27,000 cash.

Required

Record depreciation for 20X9 and the sale of the equipment on July 1, 20X9.

May 21 2020 View more View Less

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