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ACCT216

Suppose the Colorado Avalanche purchaseda new Zamboni machine to scrape the ice off the rink between periods. TheZamboni cost $100,000 and has a useful life of three years and a residual valueof $5,000 when it is sold to a minor league hockey team. The Zamboni isanticipated to drive 352 miles the first year, 375 miles the second year, and435 miles the third year when the team anticipates winning the StanleyCup.

Required:

1.Compute the first years depreciation using thefollowing methods:

a.Straight-line

b.Double-declining balance

c.Units-of-production method.

2.Which method do you think is the mostrepresentative of accurate depreciation of the Zamboni?