Question
Bombardier Inc. is one of the largest manufacturers of planes in the world. The company's long-lived assets exceed $8 billion. As a result, depreciation is
Bombardier Inc. is one of the largest manufacturers of planes in the world. The company's long-lived assets exceed $8 billion. As a result, depreciation is a significant item on Bombardier's statement of earnings. You are a financial analyst for Bombardier and have been asked to determine the impact of alternative depreciation methods. For your analysis, you have been asked to compare methods based on a machine that cost $106,000. The estimated useful life is 13 years, and the estimated residual value is $2,000. The machine has an estimated useful life in productive output of 200,000 units. Actual output was 20,000 in year 1 and 16,000 in year 2.
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