Question

Sunland Ltd. purchased a new machine on April 4, 2014, at a cost of $187,360. The company estimated that the machine would have a residual value of $16,000. The machine is expected to be used for 10,200 working hours during its four-year life. Actual machine usage was 1,400 hours in 2014; 2,000 hours in 2015; 2,400 hours in 2016; 2,300 hours in 2017; and 2,100 hours in 2018. Sunland has a December 31 year end.

Calculate depreciation for the machine under each of the following methods: (Round expense per unit to 2 decimal places, e.g. 2.75 and final answers to 0 decimal places, e.g. 5,275.)

(1) Straight-line for 2014 through to 2018.

2014 expense
2015 expense
2016 expense
2017 expense
2018 expense

(2) Diminishing-balance using double the straight-line rate for 2014 through to 2018.

2014 expense
2015 expense
2016 expense
2017 expense
2018 expense

(3) Units-of-production for 2014 through to 2018.

2014 expense
2015 expense
2016 expense
2017 expense
2018 expense

  

  

Which method results in the highest depreciation expense over the life of the asset? Highest net income? Highest cash flow?

select a method that results in the highest depreciation expense over the life of the asset

Straight-line method or Diminishing-balance methods or Units-of-production method or All three methods are the same or No Impact   

Which method results in the highest net income?

select a method that results in the highest net income   

Straight-line method or Diminishing-balance methods or Units-of-production method or All three methods are the same or No Impact

Which method results in the highest cash flow?

select a method that results in the highest cash flow                                                                     

Straight-line method or Diminishing-balance methods or Units-of-production method or All three methods are the same or No Impact

Answer 1