Atwater manufacturing 500 words

Atwater manufacturing 500 words

Atwater Manufacturing Company purchased a new machine that was specially built to perform one particular function on the assembly line. A difference of opinion has arisen as to the method of depreciation to be used in connection with this machine. Three methods are now being considered: the straight-line method, the productive-output method, and the sum-of-the-years’-digits method.

Describe each of the 3 methods.
Discuss separately the arguments for and against each of the proposed methods from both the theoretical and practical viewpoints.
Which would you select?

Solution Preview

The straight-line method of depreciation is utilized to recognize the carrying amount of an asset that is fixed evenly over its useful life. The technique charges price consistently over the beneficial life of a property that is fixed. This method of depreciation is useful where financial gains from a property are projected to be recognized consistently over its beneficial life.

(588 words)