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Schrade Company bought a machine for $71,500 cash. The estimated useful life was five years, and the estimated residual value was $5,300. Assume that the

Schrade Company bought a machine for $71,500 cash. The estimated useful life was five years, and the estimated residual value was $5,300. Assume that the estimated useful life is 165,500 units. Units actually produced were 45,200 in year 1 and 43,000 in year 2.

Required:

1. Determine the appropriate amounts to complete the following schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

2. Which method would result in the lowest earnings per share for year 1? For year 2?

3. Which method would result in the highest amount of cash outflows in year 1?

multiple choice

  • Straight-line method

  • Units-of-production method

  • Double-declining-balance method

  • Depreciation does not impact cash

4. Indicate the effects of (a) acquiring the machine and (b) recording annual depreciation on the operating and investing activities on the statement of cash flows for year 1. Assume that straight-line depreciation is used. (Indicate the direction of the effect by selecting increase, decrease, no effect from the dropdown menu.)

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