Question
On January 1, 2019, Blossom Company, a small machine-tool manufacturer, acquired for $2,660,000 a piece of new industrial equipment. The new equipment had a useful
On January 1, 2019, Blossom Company, a small machine-tool manufacturer, acquired for $2,660,000 a piece of new industrial equipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $129,500. Blossom estimates that the new equipment can produce 18,100 machine tools in its first year. It estimates that production will decline by 1,820 units per year over the remaining useful life of the equipment. The following depreciation methods may be used: (1) straight-line, (2) double-declining-balance, (3) sum-of-the-years-digits, and (4) units-of-output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation.
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