On August 3, Cinco Construction purchased special-purpose equipment at a cost of $1,938,400. The useful life...

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On August 3, Cinco Construction purchased special-purposeequipment at a cost of $1,938,400. The useful life of the equipmentwas estimated to be eight years, with an estimated residual valueof $83,040.
a. Compute the depreciation expense to berecognized each calendar year for financial reporting purposesunder the straight-line depreciation method (half-yearconvention).
b. Compute the depreciation expense to berecognized each calendar year for financial reporting purposesunder the 200 percent declining-balance method (half-yearconvention) with a switch to straight-line when it will maximizedepreciation expense.
c. Which of these two depreciation methods(straight-line or double-declining-balance) results in the highestnet income for financial reporting purposes during the first twoyears of the equipment’s use?

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a Straightline depreciation method half year convention Annual depreciation Cost Residual Value Estimated Useful Life 1938400 83040 8 231920 Year 1 2 3 4 5 6 7 8 9 Depreciation See Answer

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On August 3, Cinco Construction purchased special-purposeequipment at a cost of $1,938,400. The useful life of the equipmentwas estimated to be eight years, with an estimated residual valueof $83,040.a. Compute the depreciation expense to berecognized each calendar year for financial reporting purposesunder the straight-line depreciation method (half-yearconvention).b. Compute the depreciation expense to berecognized each calendar year for financial reporting purposesunder the 200 percent declining-balance method (half-yearconvention) with a switch to straight-line when it will maximizedepreciation expense.c. Which of these two depreciation methods(straight-line or double-declining-balance) results in the highestnet income for financial reporting purposes during the first twoyears of the equipment’s use?