Question
Three different companies each purchased a machine on January 1st 2014 for $64,000. Each machine was expected to last 5 years or 200,000 hours. Salvage
Three different companies each purchased a machine on January 1st 2014 for $64,000. Each machine was expected to last 5 years or 200,000 hours. Salvage value was estimated to be $4,000. All three machines were operated for 50,000 hours in 2014, 55,000 hours in 2015, 40,000 hours in 2016, 44,000 hours in 2017, and 31,000 hours in 2018. Each of the three companies earned $30,000 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. Answer each of the following questions. Ignore the effects of income taxes. (A.) Calculate the amount of net income for all companies in 2014. Company A? Company B? Company C?
(B.) Which company will report the highest amount of net income for 2014?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started