A manufacturing company purchased a new injection molding machine at a cost of $12,000. It also paid an installation cost of $1500, and a delivery cost of $800 on arrival of the machine. The machine has a useful life of 10 years and an estimated salvage value of $4500. Use straight line depreciation for the following questions.

From question c onwards,

assume that this trade in did not occur and use the cost basis you calculated in part a.

a. What is the cost basis, I, for the machine?

b. If the company had sold its previous injection molding machine for $5000 when it had a book value of $7000, this would have _________ the cost basis by ______.

Increased, $2000

Increased, $5000

Decreased, $2000

Decreased, $5000

c. In straight line depreciation, the depreciation allowance for the 1st year is ______ the depreciation allowance for the 10th year.

greater than

less than

the same as

d. What is the depreciation allowance for the 7th year?

e. What is the book value at the end of the 8th year?