Depreciation Choices and Outcome. Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase: Life of asset Salvage value Purchase price Sales tax 5 years $6,000 36,000 2,000 Freight cost 1,600 Electrical set-up 1,400 Custom programming 1,000 Estimated annual labor savings 7,000 Additional revenue generated 16,000 a. Determine the capitalized cost of the new machine b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming: i. Straight-line depreciation ii. Double-declining-balance method Straight-Line Depreciation Double-Declining Balance Depreciation Accumulated Book Value at Depreciation Accumulated Book Value at Expense Depreciation Year-end $ Expense Depreciation Year-End $ $ $ Year 1 $ Year 2 Year 3 c. Assume the machine is sold for $16,000 at the end of the third year after depreciation has been calculated. Determine the gain or loss assuming: i. Straight-line depreciation ii. Double-declining balance method