Question
Use this information for Questions Blue Computing Company purchased some property, plant and equipment (PPE) on January 1, Year 1. The PPE cost $5,000,000 and
Use this information for Questions
Blue Computing Company purchased some property, plant and equipment (PPE) on January 1, Year 1. The PPE cost $5,000,000 and has an estimated salvage value of $100,000. The useful life is 5 years. The units produced by the PPE will be: Year 1, 50,000 units; Year 2, 100,000 units; Year 3, 100,000 units; Year 4, 75,000 units; Year 5, 25,000 units. Please answer the following questions about this PPE.
1. The depreciation expense, for Year 3, under the straight-line method, is:
a. $980,000
b. $1,000,000
c. $1,225,000
d. $1,400,000
2. The depreciation expense, for Year 2, under the double-declining balance method, is:
a. $1,325,000
b. $1,216,000
c. $1,200,000
d. $1,120,000
3. The double-declining balance method of depreciation is:
a. Not advantageous for tax purposes
b. Called an accelerated method
c. Equivalent to the units of production method
d. Likely to give more depreciation expense over the life of the asset than will the straight-line method
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