E 7-4 Nature of Depreciation Custer Construction Co. reported $8,300,000 for equipment and $4,950,000 for accumulated depreciation-equipment on its balance sheet. a. Does the amount of $8,300,000 reported by Custer represent the replacement cost of equipment? Explain your answer. If your answer is NO then what does it represent? b. Does the accumulated depreciation balance mean that $4,950,000 is set aside in a special fund for the replacement of the equipment? E7-6 Straight-line Depreciation A refrigerator used by a meat processor has a cost of $90,000, an estimated residual value of $15,000, and an estimated useful life of 20 years What is the amount of the annual depreciation computed by the straight-line method? E7-7 Depreciation by Two Methods A Caterpillar tractor acquired on January 12 at a cost of $180,000 has an estimated useful life of 25 years. Assuming that it will have no residual value. a. Determine the depreciation for each of the first two years by the straight-line method. Round your answer to the nearest cent if rounding is required First year Second year b. Determine the depreciation for each of the first two years by the double-declining-balance method Round your answer to the nearest cent if rounding is required First year Second year