14. WindPower Inc designs and commissions the manufacture of a wind powered inverter-based constant voltage generator for research and experimentation with low-rated, highly variable, wind fi elds as a form of alternative energy.

The unit cost $35,000 plus $3,000 for shipping and installation. After 3 years, WindPower had no further use for the experimental unit and was able to sell it for $2,000, less $500 for removal. WindPower had depreciated the generator cost over the 3 years with an estimated life of 5 years and a terminal book value of $1,000. All of the following parts relate to fi nancial reporting, not computing income taxes.

a. What is the total investment cost (basis) for this generator?

b. What is the net market value actually received after three years?

c. By what amount did the book value differ from the net market value at the end of 3 years if the following depreciation method was used?

i. Straight-line depreciation.

ii. Declining balance depreciation using a rate that ensures the book value equals the salvage value.

iii. Double declining balance depreciation.

iv. Double declining balance switching to straight line depreciation.