A-1

Banko Incorporated manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1.

Purchase price	$83,200
Delivery cost	$7,000
Installation charge	$3,000
Estimated life	5	years
Estimated units	147,000
Salvage estimate	$5,000

During Year 1, the machine produced 43,000 units, and during Year 2 it produced 45,000 units.

Required

1. Determine the amount of depreciation expense for Year 1 and Year 2 using straight-line method.
2. Determine the amount of depreciation expense for Year 1 and Year 2 using double-declining-balance method.
3. Determine the amount of depreciation expense for Year 1 and Year 2 using units of production method.
4. Determine the amount of depreciation expense for Year 1 and Year 2 using MACRS, assuming that the machine is classified as seven-year property. (Round your answers to the nearest dollar amount.)

MACRS table:

Year	5-Year property,%	7-Year property,%
1	20.00	14.29
2	32.00	24.49
3	19.20	17.49
4	11.52	12.49
5	11.52	8.93
6	5.76	8.92
7		8.93
8		4.46

A-2

Becker Office Service purchased a new computer system in Year 1 for $39,300. It is expected to have a five-year useful life and a $3,900 salvage value. The company expects to use the system more extensively in the early years of its life. Required a. Calculate the depreciation expense for each of the five years, assuming the use of straight-line depreciation. b. Calculate the depreciation expense for each of the five years, assuming the use of double-declining-balance depreciation. d. Assume that Becker Office Service sold the computer system at the end of the fourth year for $20,000. Compute the amount of gain or loss using each depreciation method.

Calculate the depreciation expense for each of the five years, assuming the use of straight-line depreciation. Calculate the depreciation expense for each of the five years, assuming the use of double-declining-balance depreciation. not round intermediate calculations. Round your final answers to the nearest dollar amount.) Assume that Becker Office Service sold the computer system at the end of the fourth year for $20,000. Compute the amount of gain or loss using each depreciation method. (Round your answers to the nearest dollar amount.)