Prepare schedule showing amount of accumulated depreciation

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On Jan 1, 20X0 Cosmo Ltd acquired new industrial equipment for $2M. Component parts are not significant and need not be recognized and depreciated separately. The new equipment had a useful life of 4 years, and the residual value was estimated to be $220,000. The company estimates that the new equipment can produce 20,000 tools in this first year. Production is then estimated to decline by 2,000 units/year over the remaining useful life of the equipment.

The following depreciation methods are under consideration:

a. Declining balance (50% rate)
b. straight line
c. productive output

Problem 1: Which depreciation method would result in maximum earnings for financial statement reporting for the 3 year period ending December 20x2? Prepare a schedule showing the amount of accumulated depreciation at December 31, 20X2 under each method selected. show supporting computations in good form.

Reference no: EM132970384

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