Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase:

Required

a. Determine the capitalized cost of the new machine

b. Compute annual depreciation, accumulated depreciation, and the machine’s book value for the first three years assuming i. Straight-line depreciation ii. Double-declining-balance method

c. Assume the machine is sold for \($8,000\) at the end of the third year after depreciation has been calculated.
Determine the gain or loss assuming i. Straight-line depreciation ii. Double-declining-balance method

d. Given your answer in part c, if Mulligan was able to perfectly predict the future that the machine would be sold for \($8,000\) at the end of the third year, which depreciation method should Mulligan choose?
Ignore taxes.

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Life of asset Salvage value Purchase price Sales tax. Freight cost Electrical set-up Custom programming Estimated annual labor savings Additional revenue generated 5 years $ 3,000 18,000 1,000 800 700 500 3,500 $ 8,000