Problem 11-12 On January 1, 2016, Sheffield Company, a small machine-tool manufacturer, acquired for $1,540,000 a piece of new industrial equipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $75,000. Sheffield estimates that the new equipment can produce 13,000 machine tools in its first year. It estimates that production will decline by 1,790 units per year over the remaining useful life of the equipment. The following depreciation methods may be us (1) straight-line, (2) declining-balance, (3) sum-of-the-years'-digits, and (4) unit output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation. MACRS Depreciation Rates by Class of Property 10-year 15-year 20-year Year (200% DB) (200% DB (200% DB) (200% DB 150% DB 150% DB) 10.00 33.33 20.00 14.29 3,750 44.45 32.000 24.49 18.00 9.50 7.219 19.20 14.81 17.49 14.40 8.55 6.677 11.52 7.41 12.49 11.52 7.70 8.93 9.22 5.713 11.52 6.93 7.37 5.76 6.23 5.285 8.92 8.93 6.55. 4.888 4.522 4.46 6.55 5.90 6.56 5.91 4.462" 4.461 10 6.55 5.90 11 3.28 5.91 4.462 4.461 12 5.90 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 4.461 18 19 4.462 4.461 21 "Switchover to straight-line depreciation