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?