Schrade Company bought a machine for $98,000 cash. The estimated useful life was four years and the estimated residual value was $6,040. Assume that the estimated useful life in productive units is 121,000. Units actually produced were 44,000 in Year 1 and 46,000 in Year 2. Required: 1. Determine the appropriate amounts to complete the following schedule. 2-a. Which method would result in the lowest Earnings per Share for Year 1? 2-b. Which method would result in the lowest Earnings per Share for Year 2? 3. If used for tax reporting, which method would result in the highest amount of cash outflows in Year 1?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Schrade Company bought a machine for $98,000 cash. The estimated useful life was four years and the estimated residual value was
$6,040. Assume that the estimated useful life in productive units is 121,000. Units actually produced were 44,000 in Year 1 and 46,000
in Year 2.
Required:
1. Determine the appropriate amounts to complete the following schedule.
2-a. Which method would result in the lowest Earnings per Share for Year 1?
2-b. Which method would result in the lowest Earnings per Share for Year 2?
3. If used for tax reporting, which method would result in the highest amount of cash outflows in Year 1?
Required 1
Required 2a Required 2b
Required 3
Determine the appropriate amounts to complete the following schedule.
Note: Do not round your intermediate calculations.
Method of Depreciation
Straight-line
Units-of-production
Double-declining-balance
Depreciation Expense for
Year 1
Year 2
Net Book Value at the End of
Year 1
Year 2
< Required 1
Required 2a >
Transcribed Image Text:Schrade Company bought a machine for $98,000 cash. The estimated useful life was four years and the estimated residual value was $6,040. Assume that the estimated useful life in productive units is 121,000. Units actually produced were 44,000 in Year 1 and 46,000 in Year 2. Required: 1. Determine the appropriate amounts to complete the following schedule. 2-a. Which method would result in the lowest Earnings per Share for Year 1? 2-b. Which method would result in the lowest Earnings per Share for Year 2? 3. If used for tax reporting, which method would result in the highest amount of cash outflows in Year 1? Required 1 Required 2a Required 2b Required 3 Determine the appropriate amounts to complete the following schedule. Note: Do not round your intermediate calculations. Method of Depreciation Straight-line Units-of-production Double-declining-balance Depreciation Expense for Year 1 Year 2 Net Book Value at the End of Year 1 Year 2 < Required 1 Required 2a >
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