Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Maximillian Events purchased a machine on 1 July 2016 for a total cost of $80,000. The owner is trying to decide whether to use the

Maximillian Events purchased a machine on 1 July 2016 for a total cost of $80,000. The owner is trying to decide whether to use the straight line, units of production or reducing balance depreciation method for this machine. The machine is expected to last for 4 years and have a residual value of $8,000 at the end of its useful life. Estimated total production is 300,000 units: year 1 is 100,000 units, year 2 is 60,000 units, year 3 is 100,000 units and year 4 is 40,000 units.

For the Reducing Balance method use 44% as the rate.

(a) What would be the written down value of the machine at 30th June 2018 for each depreciation method? (3 marks)

(b) Which depreciation method would give the highest profit in the first year of the machines use? Explain your answer. (2 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Money And Wealth

Authors: Joslyn Pine

1st Edition

0486486389, 9780486486383

More Books

Students also viewed these Accounting questions

Question

Briefly summarize the monthly events of fetal development.

Answered: 1 week ago

Question

Distinguish between historical return and expected return.

Answered: 1 week ago