Determine the estimated residual value of the equipment

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Vincent Limited paid $100,000 to purchase equipment at the beginning of 2020. Vincent Limited estimated the useful life of the equipment to be 5 years or 200,000 units. The equipment will be considered fully amortized a when the balance in the Accumulated Depreciation account reaches $100,000. The equipment produced 50,000 units in 2020.

Required:

Question a. Determine the estimated residual value of the equipment.

Question b. What is the amortizable cost of the equipment?

Question c. Calculate depreciation expense for 2020 under each of the following methods:
i. straight-line
ii. units-of-production
iii. double-declining-balance

Question d. If you were a new accountant in a company and you were asked to determine how best to depreciate a new machine they just bought; how would you determine the best method? What is the difference between your method and other method? How does your method affect the income statement?

Reference no: EM132490813

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