Consider three hypothetical companies: A, B and C. At the beginning of year 1, each company...

Transcribed Image Text:

Consider three hypothetical companies: A, B and C. At the beginning of year 1, each company buys an identical piece of equipment for £5,200. The three companies have the same assumptions about the equipment useful life, estimated residual value, and productive capacity. The annual production of each company is the same. However, each company uses a different method of depreciation. As disclosed in each company's notes to the financial statements, each company's depreciation method and assumptions are as follows. Estimated residual value: £200 Estimated useful life: 5 years Production in each year (in units): Year 1 Year 2 Year 3 Year 4 Year 5 400 500 500 300 300 Depreciation methods: Company A: Straight-line method Company B: Accelerated method (assume that 50% of the depreciable amount is depreciated in year 1, and the remaining balance is depreciated equally during the subsequent years) Company C: Units of production method Calculate, for each company, the beginning and ending net book value, the annual depreciation expense, and accumulated year-end depreciation for the equipment throughout its useful life. Consider three hypothetical companies: A, B and C. At the beginning of year 1, each company buys an identical piece of equipment for £5,200. The three companies have the same assumptions about the equipment useful life, estimated residual value, and productive capacity. The annual production of each company is the same. However, each company uses a different method of depreciation. As disclosed in each company's notes to the financial statements, each company's depreciation method and assumptions are as follows. Estimated residual value: £200 Estimated useful life: 5 years Production in each year (in units): Year 1 Year 2 Year 3 Year 4 Year 5 400 500 500 300 300 Depreciation methods: Company A: Straight-line method Company B: Accelerated method (assume that 50% of the depreciable amount is depreciated in year 1, and the remaining balance is depreciated equally during the subsequent years) Company C: Units of production method Calculate, for each company, the beginning and ending net book value, the annual depreciation expense, and accumulated year-end depreciation for the equipment throughout its useful life.

Answer rating: 100% (QA)

The detailed ... View the full answer