Early in 2017, Mr. Peribonka purchased a machine for $80,000 to produce a new gadget he designed. Mr. Peribonka invested $50,000 of his own money to buy the machine and borrowed the remainder from the bank. Mr. Peribonka figures the machine will last six years, after which it will be worthless. He has sold 25,000 gadgets this year and thinks he can sell 60,000 in 2018; 100,000 in 2019 and 2020; 30,000 in 2021; and 15,000 in 2022. Mr. Peribonka needs to prepare financial statements for the year ended December 31, 2017. He needs the statements for tax purposes, the bank, and for his own information. He has most of the information put together but he isn't sure what to do about depreciation and has come to you for advice. For tax purposes the machine is in class 43, which has a declining balance CCA rate of 30 percent.
Provide the advice Mr. Peribonka has requested. Explain in detail your thinking, your alternatives, and your recommendations.