Development Industries purchased a depreciable asset for

50 000 on January #719

Development Industries purchased a depreciable asset for $50,000 on January 1, 2012. The
asset has a five-year useful life and a $10,000 estimated salvage value. The company will use
the straight-line method of depreciation for book purposes. However, Development will use the
double-declining balance method for tax purposes. Assume a tax rate of 30%.Requireda.
Prepare depreciation schedules using the straight-line and double-declining-balance methods of
depreciation for the useful life of the asset.b. Calculate the 2012 tax savings from the use of the
accelerated depreciation method for tax purposes.c. Under the straight-line method of
depreciation, what is the gain or loss if the equipment is sold (1) at the end of 2014 for $30,000
or (2) at the end of 2015 for $16,000?d. How is the gain or loss on the disposal of the
equipment presented in the financial statements? How does this differ from how depreciation
expense is presented?View Solution:
Development Industries purchased a depreciable asset for 50 000 on January

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