Reference no: EM132770782

Question - On 2 April 2018, Blitzen Amusements purchased a machine that cost $30,000. It cost Blitzen $2,000 to install the equipment and $2,500 to train the staff on the new equipment. The equipment had a useful life of two years or 30,000 units and the residual value was estimated to be $2,000.

Blitzen produced the following number of units each year:

7,000 units 2018

16,250 units 2019

13,250 units 2020

Blitzen depreciates assets using the nearest month methodology in the year of acquisition.

Required -

1. Create a depreciation schedule for 2018, 2019 and 2020 that shows depreciation expense, accumulated depreciation, and net book value, using: Declining balance (70% rate) and Units of production.

2. Which depreciation method would result in the maximum income in 2019?