Question
Three different companies each purchased a machine on January 1, 2014, for $95,000. Each machine was expected to last five years or 300,000 hours. Salvage
Three different companies each purchased a machine on January 1, 2014, for $95,000. Each machine was expected to last five years or 300,000 hours. Salvage value was estimated to be $5,000. All three machines were operated for 80,000 hours in 2014, 85,000 hours in 2015, 60,000 hours in 2016, 56,000 hours in 2017, and 55,000 hours in 2018. Each of the three companies earned $84,000 of cash revenue during each of the five years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses units-of-production depreciation. Calculate the amount of net income for all companies in 2014? Calculate the amount of net income for all companies in 2016?
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