Acc305 Intermediate Accounting E11-8 Jackson Company

Acc305 Intermediate Accounting
E11-8 Double-Declining Balance Method; Switch to Straight-line
On January 2, 2009, the Jackson Company purchased equipment to be used in the manufacturing process. The equipment has an estimated life of eight years and estimated residual value of $30,625.
The expenditures made to acquire the asset were as follows:
Purchase price 154,000
Freight charges 2,000
Installation charges 4,000

Jackson's policy is to use the double-declining balance (DDB) method of depreciation in the early years of the equipment's life and then switch to straight-line halfway through the equipment's life.

1) Calculate depreciation for each year of the asset's eight-year life.
2) Discuss the accounting treatment of the depreciation on the equipment.
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