The Sorter Company purchased equipment for $200,000 on January 2, 2007. The equipment has an estimated service life of eight years and an estimated residual value of $20,000.

Required

Compute the depreciation for 2007 under each of the following methods:

1. Straight-line

2. Sum-of-the-years’-digits

3. Double-declining-balance

4. Compute the company’s return on assets (net income divided by average total assets, as we discussed in Chapter 6) for each method in 2007 if the income before depreciation is $100,000. For simplicity, use ending assets, and ignore interest, income taxes, and other assets.