Crane Company purchased equipment on March 27, 2018, at a cost of $284,000. Management is contemplating the merits of using the diminishing-balance or units-of-production method of depreciation instead of the straight-line method, which it currently uses for other equipment. The new equipment has an estimated residual value of $4,000 and an estimated useful life of either four years or 80,000 units. Demand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14,200 units in 2018; 20,600 units in 2019; 20,200 units in 2020; 20,000 units in 2021; and 5,000 units in 2022. Crane has a December year end. |