Q1. (Property, Plant & Equipment) Pickering Company purchased equipment on March 31, 2020, at a cost of $248,000. The company has a December 31 year end and depreciate their equipment to the nearest full month. 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 $8,000 and an estimated useful life of 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: 14,000 units in 2020 20,000 units in 2021 21,000 units in 2022 20,000 units in 2023 5,000 units in 2024 Required: a. Calculate depreciation expense for the year ending December 31, 2020 using the following methods: i. Straight-line method ii. Units-of-production method iii. Double-diminishing-balance method b. What estimates were used in determining the depreciation amount in part (a)? How accurate do you feel these estimates are? c. How does each method of depreciation affect the company's cash flows? d. Which method do you recommend? Why? e. Now assume that the double-diminishing balance method has been used to calculate depreciation, independent of the above. Calculate the gain or loss to the company if they sell this equipment for $100,000 cash proceeds on January 1, 2022