Sanders Construction Co. specializes in building replicas of historic houses

Sanders Construction Co. specializes in building replicas of historic houses. Brett Sanders, president of Sanders Construction, is considering the purchase of various items of equipment on July 1, 2014 for $300,000. The equipment would have a useful life of 5 years and no residual value. Brett is considering depreciating the equipment by the straight-line method or the double declining balance method.

Answer the following questions:

  1. Calculate the depreciation for the first year using the straight-line method and the Double declining balance method, show your work.
  2. In a short paragraph, explain the straight-line depreciation method and the Double declining balance method.
  3. In your opinion, which method would be better for the company to use, why? Explain your answer.
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