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Question 3 (18 marks, 32 minutes) Part 1 - Depreciation (10 marks) On January 1, 2016, Chocolate Inc acquired equipment costing $148,000, which will be

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Question 3 (18 marks, 32 minutes) Part 1 - Depreciation (10 marks) On January 1, 2016, Chocolate Inc acquired equipment costing $148,000, which will be depreciated on the assumption that the equipment will be useful for five years and have a residual value of $10,000. The machine produces chocolate bars, which Chocolate Inc can then sell to retailers. The estimated number of chocolate bars that will be produced is as follows: 2016--21,000 bars; 2017-25,000 bars, 2018-29,000 bars; 2019-27,000 bars; 2020-23,000 bars. The company is now considering possible methods of depreciation for this asset. a. Calculate what the depreciation expense would be for each year of the asset's life, if the company chooses: I Units of production (6 marks) ii. Straight line depreciation (2 marks) a. Explain why a company may choose to use the units of production method of depreciation, rather than using the straight-line method for calculating depreciation? (2 marks)

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