Change of Depreciation Methods Rustic Corporation purchased operating assets with an expected useful life of five years. The company paid $310,000 for the assets.

At the end of the second year of operations, the carrying value (book value) of the assets was $202,000 using straightline depreciation.

a. What, if any, is the estimated salvage value of the assets?

b. If Rustic sold the assets at the end of the second year for

$225,000, what gain or loss would be recorded on the sale? Give the journal entry to record the sale.

c. What would the carrying value of the assets have been at the end of the second year if Rustic had used doubledeclining-balance rather than straight-line depreciation?

d. If the federal income tax rate is 30 percent, what amount of cash savings (loss) would Rustic have realized if it had used double-declining-balance depreciation for tax purposes rather than straight-line for the first two years of ownership?