[WendyRC]

Three different companies each purchased a machine on January 1, 2012, for $54,000. Each machine was expected to last five years or 200,000 hours. Salvage value was estimated to be $4000. All three machines were operated for 50,000 hours in 2012, 55,000 hours in 2013, 40,000 hours in 2014, 44,000 hours in 2015, and 31, 000 hours in 2016. Each of the three companies earned $30,000 of cash revenue during each of the five years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses units-of-production depreciation.
Required
Answer each of the following questions. Ignore the effects of income taxes.
a. Which company will report the highest amount of net income for 2012?
b. Which company will report the lowest amount of net income for 2014?
c. Which company will report the highest book value on the December 31, 2014, balance sheet?
d. Which company will report the highest amount of retained earnings on the December 31, 2015, balance sheet?
e. Which company will report the lowest amount of cash flow from operating activities on the 2014 statement of cash flows?

[Curlyben]

SO what do YOU think and why ?

[pready]

First you need to calculate the depreciation for each machine for the different years. Once you have done that you will be able to answer the questions.

a. This will be the company whose machine that has the lowest depreciation for the year.

b. This will be the company whose machine that has the highest amount of depreciation for the year.

c. This will be the company whose machine that has the lowest amount of accumulated depreciation up to year 2014.

d. This will be the company whose mamchine that has the lowest amount of accumulated depreiation up to year 2015.

e. This will be the company whose machine has the highest amount of depreciation during the year 2014.