XYZ purchased an equipment worth of $150,000 including insurance cost $30,000 and duty cost $20,000 on May 15, 2018. They have decided to capitalize the $35,000 installation charge instead of $20,000 duty cost. Scrap value of the equipment was 5% of the actual price. Economic life of the equipment was 5 years.

Calculate the depreciation expense for the year 2018 and 2019 under the following method:

a) Straight line method

b) Sum of the years method

If the net cash flow of the equipment in 2018 and 2019 was 50,000 and 40,000 respectively, what is ROI under the both methods.

Answer rating: 100% (QA)

First we need to calculate the cost of the Asset C... View the full answer