On July 1, 2014, Sport Company purchased for $2,880,000 snow making machine equipment having an estimated useful life of 5 years with an estimated salvage value of $120,000. Depreciation is taken for the portion of the year the asset is used.

Instructions; determine the depreciation expense and year-end book values for 2014 & 2015

a)

Sum-of-the-years'-digits method	2014	2015
Equipment	$2,880,000	$2,880,000
Less: Accumulated Depreciation
Year-End Book Value
Depreciation expense

b)

Double-Declining Balance Method	2014	2015
Equipment	$2,880,000	$2,880,000
Less: Accumulated Depreciation
Year-End Book Value
Depreciation Expense for the year

c) Assume the company had used straight-line depreciation durning 2014 and 2015. During 2016, the company determined that the equipment would be useful to the company for only one more year beyond 2016. Salvege value is estimated at $160,000.

Compute the amount of depreciation expense for 2016 income statement.

What is the depreciation base of this asset?