Question
Acura Company purchased a machine on January 1, 2016 for $625,000. The machine has a four year useful life and a salvage value of $20,000.
Acura Company purchased a machine on January 1, 2016 for $625,000. The machine has a four year useful life and a salvage value of $20,000. The machine was depreciated using sum of the years digits. On January 1, 2018, two years later, it was determined they should have used straight line depreciation and decided to change to straight line. The useful life was also extended by three years, and the salvage value was reduced to $15,000. Profit for 2016 was $800,000 and for 2017 was $700,000 using sum of the years digits depreciation. Prior to depreciation expense in 2018, profits were $200,000. Determine the correct profits for 2016, 2017, 2018.
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