Question: On January 1, 2011, the Hogan Manufacturing Company purchased a machine for $500,000. The company expects the service life of the machine to be five years and its anticipated residual value to be $50,000. The company's fiscal year-end is December 31 and the double-declining balance (DDB) depreciation method is used for all depreciable assets. During 2013, the company switched from the DDB to the straight line method. In 2013, Hogan also revised its estimate of service life from five to seven years and the estimated residual value to 20,000.
Required:
A. Find the accumulated depreciation as of the end of 2012.
B. Find the annual depreciation that will be recorded for 2013 and subsequent years.
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