Seligram applies the double declining balance depreciation method to the new testing equipment. Do you agree with the choice of double declining depreciation method over the straitline method? Describe the main differences between the two depreciation methods. Which method would you recommend to Seligram for its cost accounting system? For its tax reporting? For its financial reporting? Your answer should be concise and restricted to the space below.

Seligram Case (10 points). The following exhibit is taken from the Seligram Case. Exhibit 7 Seligram, Inc.: Electronic Testing Operations New Testing Equipment Economics and Operating Characteristics Cost: $2 Million Useful Life: 8 Years Depreciation Double Declining Balance Method: (First Year Depreciation Costs of $500,000) Location: Main Test Room Utilization: 10% first year, rising to 60% by third year and in all subsequent years, based on 4,000 hours per year availability (2 shifts x 2,000-hour year) Direct Labor Approximately five minutes per hour of operation; average labor rate of $30 Requirements: per hour Engineering $75,000 in installation and programming costs in first year Requirements: Estimated overhead $250,000 $100,000 variable, $150,000 fixed) (nonengineering depreciation)