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Scenario 11-3 In the Early 1900s, a New Product Was Developed-The Phonograph

question 108

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Scenario 11-3
In the early 1900s, a new product was developed-the phonograph record. It allowed people to listen to and appreciate recorded music in the privacy of their homes. At first, consumers were reluctant because the idea was so novel and difficult to comprehend. During the 1930s, the pioneers in the record industry were experiencing strong sales and profits. As a result, other firms began to enter the market and competition intensified. At this point, there were hundreds of record producers and manufacturers. During the 1940s and 1950s, sales continued to increase, but at a much slower rate. The market stayed at approximately the same level until the late 1960s when a new technology arrived in the form of the eight-track tape. The record market began a slow decrease in sales. By the 1970s, another new technology, cassette tapes, replaced the eight-track tape. During the 1970s and 1980s, record production continued to decrease. In the late 1980s, sales dropped rapidly as yet another new technology arrived, the compact disc. Digital downloading of songs from online stores like iTunes has become the norm. Today, most stores no longer carry records, which have become a niche product.
-Refer to the scenario. The market for record albums in the 1930s suggests phonograph records were in which stage of the product life cycle at that time?

Definitions:

Retrospective Approach

The retrospective approach in accounting involves restating past financial statements as if a new accounting policy had been in effect in those periods, to provide consistency in financial reporting.

Depreciation Rate

The percentage or method used annually to allocate the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Salvage Value

The estimated residual value of an asset after the asset has reached the end of its useful life.

Equipment Purchase

The acquisition of physical assets like machinery, computers, or production tools for business operations, often involving capital expenditure.