Part B

Cisco Systems is purchasing a new bar code - scanning device for its service center in San Francisco. The table that on the right lists the relevant cost items for this purchase. The operating expenses for the new system are $12,000 per yealr, and the useful life of the system is expected to be five years. The SV for depreciation purposes is equal to 23% of the hardware cost. Cost Item Hardware Training Cost $165,000 $16,000 $15,000 a. What is the BV of the device at the end of year two if the SL depreciation method is used? b. Suppose that after depreciating the device for one year with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining four years). What is the device's BV at the end of three years? a. Using the SL depreciation method the BV of the device at the end of year two is $ 132780 Round to the nearest dollar.) b. The device's book value at the end of year three using the method described above is $41,098. (Round to the nearest dollar.)