The company founder hires us as consultants and asks that we oversee the accounting for new equipment purchased on January 1. The founder wants to know the implications of different depreciation methods and estimates for the companys financial statements. Those statements will be used to attract financing from new investors and creditors. At the end of the equipments first year in operation, we are given the following Tableau Dashboard.

Estimated Useful Life of Assets Purchase Price & Estimated Salvage Value

building 15 years, equipment 4 years and truck 6 years

Maroon 70,000, Dark Green 30,000, Red 40,000, Green 10,000, Orange 30,000 and Light Green 5,000

Actual & Estimated Units-of-Production

Year 1 Production: $35,000 units

Year 2 Production: $55,000 units

Year 3 Production: $25,000 units

Year 4 Production $5,000 units

1(a). Determine the equipments first-year depreciation under the straight-line method. 1(b). Determine the equipments first-year depreciation under the units-of-production method. Note: Actual units produced for Year 1 were equal to the units estimated to be produced for Year 1. 1(c). Determine the equipments first-year depreciation under the double-declining-balance method. 2. Which method in part 1 results in the highest net income in the first year? 3. If the company anticipates that its use of assets will vary greatly from one year to the next based on usage, which method would we recommend the company use? 4. The founder is concerned that a depreciation method might result in more total depreciation expense over the useful life of an asset than another method. Which method would result in the highest amount of depreciation over an assets useful life?

Options for the first box of Choose Numerator

• Beginning book value
• Cost
• Cost minus salvage

Options for the first box Choose Denominator

• Double the SL rate
• Estimated units of production
• Estimated useful life (years)

options for the first box of Choose numerator

• Beginning book value
• Cost
• Cost minus salvage

Option for the first box of Choose Denominator

• Double the SL rate
• Estimated useful life (years)
• Total units of production

Options for this table

Double-declining-balance

Straight-line method

Units-of-production

Options for this table

• Amortization method
• Double-declining-balance method
• Straight-line method
• Units-of-production method

The founder is concerned that a depreciation method might result in more total depreciation expense over the useful life of an asset than another method. Which method would result in the highest amount of depreciation over an assets useful life?

Options for this table:

• Double-declining-balance method
• Straight-line method
• The three methods result in the same total depreciation over the assets life.
• Units-of-production method

Building Equipment Truck $70,000 $60,000 $50,000 $40,000 Years $30,000 $20,000 $10,000 $0 Purchase Salvage Purchase Salvage Purchase Salvage Price Value Price Value Price Value Building Equipment Truck Year 1 Production Actual Year 2 Production Estimated E Year 3 Production Estimated Year 4 Production Estimated Estimated 25,000 25,000 50.000 50,000 75,000 Total Units to be produced 75.000 100,000 200.000 125,000 Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 1C Required 2 Required 3 Required 4 Determine the equipment's first-year depreciation under the straight-line method. Straight-Line Method Choose Numerator: Choose Denominator: Annual Depreciation Expense Depreciation expense Required 1A | Required 1B Required 1C Required 2 Required 3 Required 4 Determine the equipment's first-year depreciation under the units-of-production method. Note: Actual units produced for Year 1 were equal to the units estimated to be produced for Year 1. Units-of-production Depreciation 1 Choose Denominator: Choose Numerator: = Annual Depreciation Expense Depreciation expense per unit Year Annual Production (units) Depreciation Expense Complete this question by entering your answers in the tabs below. Required 1A Required 1B | Required 10 Required 2 Required 3 Required 4 Determine the equipment's first-year depreciation under the double-declining-balance method. Depreciation for the Period End of Period | Annual Period Beginning of Period Book Value Depreciation Rate (%) Depreciation Expense Accumulated Depreciation Book Value First Year Required 1A Required 1B Required 2 Required 3 Required 4 Which method in part 1 results in the highest net income in the first year? Which method in part 1 results in the highest net income in the first year? Required 1A Required 1B Required 10 Required 2 Required 3 Required 4 If the company anticipates that its use of assets will vary greatly from one year to the next based on usage, which method would we recommend the company use? Which method would we recommend the company use? Required 1A Required 1B Required 1C | Required 2 Required 3 Required 4 The founder is concerned that a depreciation method might result in more total depreciation expense over the useful life of an asset than anoth Eresult in the highest amount of depreciation over an asset's useful life? Which method would result in the highest amount of depreciation over an asset's useful life