New equipment to read 96-bit product codes that are replacing old bar codes has just been purchased by General Food Stores. As a trial, 1000 of the items will be initially purchased. For book depreciation purposes (not tax), the total investment of $50,000 will be written off over a 4-year period, with no salvage value, by applying one of three methods—SL, 1.75% DB, or DDB. The objective is to have the largest amount of accumulated depreciation after 2 years, in order to minimize the lost depreciation if it is again necessary to purchase new-technology readers prior to the end of the 4-year useful life of the readers just purchased. You know that the answer is the DDB method, but you must graphically demonstrate this result to your supervisor. Use a spreadsheet to do so.
What will be an ideal response?
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