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Compute depreciation for the first three years

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Reference no: EM131697587

Problem - On January 1, 2017 ABC Company purchased new equipment to produce golf balls.

Cost of equipment                              $1,260,000

Estimated useful life                            5 years

Estimated salvage value                      $60,000

Estimated production per year              Year 1 - 12,000

                                                         Year 2 - 13,000

                                                         Year 3 - 15,000

                                                         Year 4 - 20,000

                                                         Year 5 - 20,000

Required: Compute depreciation for the first three years using the following methods

A - straight line

B - double declining balance

C - Sum of the years digits

D - Units of production

Required: Identify the depreciation method that would result in the highest net income on an income statement dated for the three years ended 12-31-2019.

Reference no: EM131697587

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