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Jansing Corporation acquired




1. On January 2, 2011, Jansing Corporation acquired a new manchine with an estimated useful life of five years. The cost of equipment was $40,000 with a residual value of $5,000.;a. Prepare a complete depreciation table under the three depreciation methods listed below. In each case, assume that a full year of depreciation was taken in 2011.;1. Straight-line.;2. 200 percent declining-balance.;3. 150 percent declining balance with a switch to straight-line when it will maximize depreciation expense.;b. Comment on significant differences or similarities that you observe among the patterns of depreciation expense recognized under each of these methods.;2. A recent annual report of H. J. Heinz Company includes the following note;Depreciation: For financial reporting purposes, depreciation is provided on the straight- line method over the estimated useful lives of the assets, which generally have the following ranges: buildings? 40 years or less, machinery and equipment? 15 years or less, computer software? 3? 7 years, and lease hold improvements? over the life of the lease, not to exceed 15 years. Accel-erated depreciation methods are generally used for income tax purposes.;a. Is the company violating the accounting principle of consistency by using different deprecia-tion methods in its financial statements than in its income tax returns? Explain.;b. Why do you think that the company uses accelerated depreciation methods in its income tax returns?;c. Would the use of accelerated depreciation in the financial statements be more conservative or less conservative than the current practice of using the straight- line method? Explain.


Paper#79768 | Written in 18-Jul-2015

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