Estimated useful life of assets

Building:15 years

Equipment: 4 years

Truck: 6 years

Actual and Estimated Units of Production:

year 1 actual: 35,000

year 2 estimated: 55000

year 3 estimated: 25000

year 4 estimated: 5000

The company founder hires us as consultants and asks that we oversee the accounting for new equipment purchased on January 1 The founder wants to know the implications of different depreciation methods and estimates for the company's financial statements. Those statements will be used to attract financing from new investors and creditors. At the end of the equipment's first year in operation, we are given the following Tableau Dashboard. Estimated Useful Life of Assets Purchase Price & Estimated Salvage Value Building Equipment Truck $70,000 20 16 $60,000 $50,000 12 $40,000 Years $30,000 $20,000 G $10,000 $0 0 Purchase Salvage Purchase Salvage Purchase Salvage Price Value Price Value Price Value Building Equipment Truck TOT Actual & Estimated Units-of-Production Year 1 Production Actual Year 2 Production Estimated Year 3 Production Estimated Estimated Year 4 Production 0 125,000 25,000 100,000 50,000 75,000 Total Units to be produced 1(a). Determine the equipment's first-year depreciation under the straight-line method. 1(b). Determine the equipment's first-year depreciation under the units-of-production method. Note: Actual units produced for Year 1 were equal to the units estimated to be produced for Year 1 1(c). Determine the equipment's first year depreciation under the double-declining-balance method. 2. Which method in part 1 results in the highest net income in the first year? 3. If the company anticipates that its use of assets will vary greatly from one year to the next based on usage, which method would we recommend the company use? 4. The founder is concerned that a depreciation method might result in more total depreciation expense over the useful life of an asset than another method. Which method would result in the highest amount of depreciation over an asset's useful life? Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 10 Required 2 Required 3 Required 4 Determine the equipment's first-year depreciation under the straight-line method. Straight-Lino Method Choose Numerator: Choose Denominator: Annual Depreciation Exponse Cost minus salvage Estimated useful life (years) Depreciation expense 1 Required 1A Required 1B > Complete this question by entering your answers in the tabs below. Required 1A Required 18 Required 1C Required 2 Required 3 Required 4 Determine the equilment's first-year depreciation under the units-of-production method. Note: Actual units produced for Year 1 were equal to the units estimated to be produced for Year 1. Units-of-production Depreciation Choose Numerator: Choose Denominator: = Annual Depreciation Exponse Cost minus salvage Total units of production = Depreciation expense per unit 0 Year Annual Production (units) Depreciation Expono 1 Required 1A Required 1B Required 10 Required 2 Required 3 Required 4 Determine the equipment's first-year depreciation under the double-declining-balance method. End of Period Depreciation for the Period Beginning of Depreciation Depreciation Period Book Value Rate(%) Expense Accumulated Depreciation Annual Period Book Value First Year