MR.ABC , purchased new furniture for its store on april 1, 2010. The furniture is expected to have a 20-year life and no residual value. The following expenditures were associated with the purchase:

Cost of the furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000

Freight charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750

Sales taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890

Installation of furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Cost to repair furniture damaged during installation . . . . . . . . . . . . . . . . . . . . . . 700

Instructions (MARKS 6)

a. Compute depreciation expense for the years 2010 through 2019 under each depreciation method listed below:

1. Straight-line, with fractional years.

2. 200 percent declining-balance,

3. 150 percent declining-balance,

b. Which of the depreciation methods applied in part a resulted in the lowest reported book value at the end of 2019? Is book value an estimate of an assets fair value? Explain.

c. Assume that Mr. ABC , sold the old furniture that was being replaced. The old furniture had originally cost $3,000. Its book value at the time of the sale was $600. Record the sale of the old furniture under the following conditions:

1. The furniture was sold for $800 cash.

2. The furniture was sold for $500 cash.