question archive Whitley Corporation purchased machinery on January 1, 2002, at a cost of $100,000
Whitley Corporation purchased machinery on January 1, 2002, at a cost of $100,000
Subject:AccountingPrice: Bought3
Whitley Corporation purchased machinery on January 1, 2002, at a cost of $100,000. The
estimated useful life of the machinery is three years, with an estimated residual value at the end of
that period of $10,000. The company is considering different amortization methods that could be
used for financial reporting purposes.
a) Prepare separate amortization schedules for the machinery for its three-year life using the
straight-line method and the declining-balance method using double the straight-line rate.
Round your answers to the nearest dollar.
(b) Which method would result in the higher reported net income in 2002? In the higher total net
income over the three-year period?
(c) Which method would result in the higher cash flow from operations in 2002? In the higher
total cash flow over the three-year period?
