Depreciation Methods}

Hansen Supermarkets purchased a radio frequency identification (RFID) system for one of its stores at a cost of \(\$ 130,000\). Hansen determined that the system had an estimated life of eight years (or \(50,000,000\) items scanned) and an estimated residual value of \(\$ 6,000\).

Required:
1. Determine the amount of depreciation expense for the first and second years of the system's life using the

(a) straight-line and

(b) double-declining-balance depreciation methods.
2. If the number of items scanned the first and second years were \(7,200,000\) and \(8,150,000\), respectively, compute the amount of depreciation expense for the first and second years of the system's life using the units-of-production depreciation method.
3. Compute the book values for all three depreciation methods as of the end of the first and second years of the system's life.
4. CONCEPTUAL CONNECTION What factors might management consider when selecting among depreciation methods?
\section*{Problem