Juan Martinez, CFO of VIRMIN, S.A., is selecting the depreciation method to use for a new machine. Th e machine has an expected useful life of six years. Production is expected to be relatively low initially but to increase over time. Th e method chosen for tax reporting must be the same as the method used for financial reporting. If Martinez wants to minimize tax payments in the first year of the machine’s life, which of the following depreciation methods is Martinez most likely to use?

A. Straight-line method B. Units-of-production method C. Double-declining balance method Th e following information relates to Questions 7 and 8.
Miguel Rodriguez of MARIO, S.A., an Uruguayan corporation, is computing the depreciation expense of a piece of manufacturing equipment for the fiscal year ended 31 December 2009.
Th e equipment was acquired on 1 January 2009. Rodriguez gathers the following information (currency in Uruguayan pesos, UYP):
Cost of the equipment UYP 1,200,000 Estimated residual value UYP 200,000 Expected useful life 8 years Total productive capacity 800,000 units Production in FY 2009 135,000 units Expected production for the next 7 years 95,000 units each year