Bellair Corp. a tool-making company, acquired equipment for $4M on 1 January 2017. 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 2018 and to continue to decline by another 4,000 units in each subsequent year of use.

Required:

Prepare a table, along with supporting calculations, showing the amount of accumulated depreciation and Net Book Value for the four years ending 31 December 2020, under each of the following depreciation methods:

Declining balance (50% rate) (6 marks)

Straight line (6 marks)

Productive output (6 marks)

Which depreciation method would result in the highest earnings for financial reporting for the four-year period ending 31 December 2020? (2 marks)