Question: Question 4 ABC Systems Co. Ltd. is purchasing a new equipment for its service center. The table below lists the relevant cost items for

Question 4 ABC Systems Co. Ltd. is purchasing a new equipment for

Question 4 ABC Systems Co. Ltd. is purchasing a new equipment for its service center. The table below lists the relevant cost items for this purchase. The operating expenses for the new equipment are $10,000 per year, and the useful life of the equipment is expected to be 5 years. The salvage value (SV) of the equipment at EOY 5 is equal to 25% of the hardware cost. Hardware Training Installation Shipping & Handling Cost $160,000 $15,000 $12,000 $ 3,000 (a) What is the cost basis for this equipment? (b) What is the book value (BV) of the equipment at EOY 4 if the straight line (SL) depreciation method is used? What is the depreciation expense for Year 4 if the 150% declining balance (DB) depreciation method is used? (d) Suppose that after depreciating the equipment for 2 years with the SL method, the firm decides to switch to the double declining balance (DB) depreciation method for the remainder of the equipment's life (the remaining 3 years). What is the depreciation expense for Year 4 AND what is the equipment's book value (BV) at EOY 4?

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