Accounting for Long-term Operational Assets Description: Congratulations! You have been hired as an accountant by the company HappyDay, which produces dairy products. Your new boss believes that your knowledge will help improve the company's performance and increase its profitability. HappyDay is planning to invest $20 million and acquire a new production line at the beginning of Year 3. Also, the company has intents to change the depreciation policy in order to manage the costs of production and income tax expenses better. Your new boss asks you to calculate depreciation expenses using straight-line, double- declining balance and units-of-production methods to determine which of the methods is better. The new asset is expected to have a 10-year useful life. The total production is estimated at 500,000 tons. With respect to the new asset, HappyDay is expecting to generate the following results in Years 3-5. Year 3 Year 4 Years Expected amount of production, 45,000 65.000 60,000 Net Sales, thousands 85,000 120,000 110,000 Expenses (before depreciation and 45,000 80,000 73,000 Income tax rate, % 30 30 tons income tax), thousands 30 Answer the following questions (refer to the textbook, Chapter 8 pp. 428-435): 1. Determine the amount of depreciation expense in each year (Years 3-5) and accumulated depreciation HappyDay would report in the Year 5 financial statements. Use straight-line, double-declining balance, and units-of-production methods. 2. Compute HappyDay's Total Expenses, Income Tax, and Net Income in Years 3-5. Prepare the calculations using the depreciation amounts computed according to straight-line, double-declining balance, and units-of-production methods. 3. In your opinion, which of the depreciation methods should be used by HappyDay? Explain why