3. b. Three companies, Company A, Company B, Company C, purchase an identical piece of

manufacturing equipment for use in their operations. The cost of the equipment is $3000, the estimated salvage value is $200, and the useful life of the equipment is 4 years.

Further, the total production capacity of the equipment over its useful life equals 1,000 units. Each company earns 3,500 in revenues and incurs expenses of $1500 (excluding depreciation) each year. Companies are subject to a tax rate of 30%. The actual output level of each of the companies over the 4 years are:

Year	1	2	3	4
Production (units)	300	400	200	100

Company A uses the straight-line method of depreciation

Company B uses the double-declining method

Company C uses the Units-of-Production method

Required: Calculate each company’s beginning net book value, annual depreciation expense, end-of-the-year accumulated depreciation, and ending net book value for each year. Explain the difference in the timing of recognition of depreciation expense between the companies. Calculate each company’s net profit margin for each of the 4 years. Also, evaluate the impact of the depreciation method on this ratio - 500 Words Answer compulsory