Bellair Corp. a tool-making company, acquired equipment for $4M on 1 January 20X7. The equipment had an
Question:
Bellair Corp. a tool-making company, acquired equipment for $4M on 1 January 20X7. The equipment had an estimated useful life of eight years at acquisition and the residual value was estimated at $440,000. Bellair Corp. estimated that the newly acquired equipment would produce 40,000 tools in its first year of use, 14,000 more than its old equipment. Tool production was estimated to decline by 4,000 units in 20X8 and to continue to decline by another 4,000 units in each subsequent year of use.
Required:
1. Prepare a schedule, along with supporting calculations, showing the amount of accumulated depreciation at 31 December 20X9, under each of the following depreciation methods:
1. Declining-balance (50% rate)
2. Straight-line
3. Productive-output
2. Which depreciation method would result in the highest earnings for financial reporting for the three-year period ending 31 December 20X9?
Step by Step Answer:
Intermediate Accounting Volume 1
ISBN: 9781260881233
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel