On April 22, 2023, a company purchased equipment for $129,200. The company expects to use the equipment for 12,000 working hours during its four-year life and that it will have a residual value of $14,000. The company has a December 31 year end and pro-rates depreciation to the nearest month. The actual machine usage was: 1,900 hours in 2023; 2,800 hours in 2024; 3,700 hours in 2025; 2,700 hours in 2026; and 1,100 hours in 2027. a) Prepare a depreciation schedule for the life of the asset under each of the following methods: 1. Straight-Line 2. Double diminishing-balance assuming a rate of 50% 3. Units-of-production b) Which method results in the lowest profit over the life of the asset? c) Which method results in the least cash used for depreciation over the life of the asset?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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1. On April 22, 2023, a company purchased equipment for $129,200. The company expects to use the equipment for 12,000 working hours during its four-year life and that it will have a residual value of $14,000. The company has a December 31 year end and pro-rates depreciation to the nearest month. The actual machine usage was: 1,900 hours in 2023; 2,800 hours in 2024; 3,700 hours in 2025; 2,700 hours in 2026; and 1,100 hours in 2027.

a) Prepare a depreciation schedule for the life of the asset under each of the following methods:

1. Straight-Line

2. Double diminishing-balance assuming a rate of 50%

3. Units-of-production

b) Which method results in the lowest profit over the life of the asset?

c) Which method results in the least cash used for depreciation over the life of the asset?

Calculate partial-year depreciation using different methods.

Please show all steps, thank you.

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