Reeves Co. filed suit against Higgins, Inc., seeking damages for copyright violations. Higgins' legal counsel believes it is pro
bable that Higgins will settle the lawsuit for an estimated amount in the range of $170,000 to $270,000, with all amounts in the range considered equally likely. How should Higgins report this litigation?
As a liability for $170,000 with disclosure of the range.
As a disclosure only. No liability is reported.
As a liability for $270,000 with disclosure of the range.
As a liability for $220,000 with disclosure of the range.
As a liability for $170,000 with disclosure of the range.
As a disclosure only. No liability is reported.
As a liability for $270,000 with disclosure of the range.
As a liability for $220,000 with disclosure of the range.
1 answer:
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Answer: <u><em>Depreciation for the first year = 17825</em></u>
Explanation:
Given:
Machine purchased for $125,000
Salvage value of $10,000
Output = 100,000
First year of operation, Output = 15500
First, we'll evaluate depreciation per unit over the entire life of the machine:
i.e.
Depreciation per unit =
<em>Depreciation per unit = 1.15</em>
Now, we'll compute the depreciation for the first year:
Depreciation for the first year = Depreciation per unit × Output (first year)
Depreciation for the first year = 1.15 × 15500
<u><em>Depreciation for the first year = 17825</em></u>