Which method would we recommend the company use

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Reference no: EM133922953

Problem

The company founder hires us as consultants and asks that we oversee the accounting for new equipment purchased on January 1. The founder wants to know the implications of different depreciation methods and estimates for the company's financial statements. Those statements will be used to attract financing from new investors and creditors. At the end of the equipment's first year in operation, we are given the following Tableau Dashboard.

I. (i). Determine the equipment's first-year depreciation under the straight-line method.

(ii). Determine the equipment's first-year depreciation under the units-of-production method. Note: Actual units produced for Year 1 were equal to the units estimated to be produced for Year 1.

(iii). Determine the equipment's first-year depreciation under the double-declining-balance method.

II. Which method in part I results in the highest net income in the first year?

III. If the company anticipates that its use of assets will vary greatly from one year to the next based on usage, which method would we recommend the company use? Get the instant assignment help.

IV. The founder is concerned that a depreciation method might result in more total depreciation expense over the useful life of an asset than another method. Which method would result in the highest amount of depreciation over an asset's useful life?

Reference no: EM133922953

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