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Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $33,000. The estimated useful life was five years and
Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $33,000. The estimated useful life was five years and the residual value was $3,500. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production was year 1, 2,000 units; year 2, 3,000 units; year 3, 2,000 units; year 4, 2,000 units; and year 5, 1,000 units.
- depreciation schedule for each of the alternative methods.
- a.Straight-line.
- b.Units-of-production.
- c.Double-declining-balance.
- Which method will result in the highest net income in year 2? Does this higher net income mean the machine was used more efficiently under this depreciation method?
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