Crane Company purchased equipment on March 31, 2021, at a cost of $252,000. Management is considering the merits of using the diminishing-balance or units-of-production method of depreciation instead of the straight-line method, which it currently uses for other equipment. The new equipment has an estimated residual value of $4,000 and an estimated useful life of either four years or 80,000 units. Demand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14,800 units in 2021; 20.200 units in 2022; 20,000 units in 2023; 20,000 units in 2024; and 5,000 units in 2025. Crane has a December 31 year end.

Crane Company purchased equipment on March 31, 2021, at a cost of $252,000. Management is considering the merits of using the diminishing-balance or units-of-production method of depreciation instead of the straight-line method, which it currently uses for other equipment. The new equipment has an estimated residual value of $4,000 and an estimated useful life of either four years or 80,000 units. Demand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14,800 units in 2021; 20.200 units in 2022; 20,000 units in 2023; 20,000 units in 2024; and 5,000 units in 2025. Crane has a December 31 year end.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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