A machine that produces cellphone components is purchased on January 1, 2016, for $100,000. It...
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Accounting
A machine that produces cellphone components is purchased on January 1, 2016, for $100,000. It is expected to have a useful life of four years and a residual value of $10,000. The machine is expected to produce a total of 200,000 components during its life, distributed as follows: 40,000 in 2016, 50,000 in 2017, 60,000 in 2018, and 50,000 in 2019. The company has a December 31 year end.
Required:
a.) Calculate the amount of depreciation to be charged each year, using each of the following methods:
i.) Straight-line method
ii.) Units-of-production method
iii.) Double-diminishing method
b.) Which method results in the highest depreciation expense:
i.) during the first two years?
ii.) over all four years?
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