Problem 1:

Carl is curious about the original cost of the digital imaging equipment he uses at the First National Bank. Accounting cannot tell him the cost, but they know the annual depreciation over an 8-year period is $18,900 per year. If all items are straight line depreciated and the salvage is always 25% of the first cost, estimate the original cost.

Problem 2:

Columbia Construction purchased new equipment for its project to transform an existing, vacant facility into milk and butter processing plant. For the equipment, B = $350,000, and S = $50,000. Book depreciation will use the SL method with n = 5 years. Plot annual depreciation, accumulated depreciation, and book value on one graph.

Problem 3:

A company purchased equipment for new highway construction in Manitoba, Canada, costing $500,000 Canadian. Estimated salvage at the end of the expected life of 5 years is $50,000. Various acceptable depreciation methods are being studied currently.

Determine the depreciation for year 3 using the DDB, 150% DB and SL methods.

Calculate the depreciation rate dt for each year t for the DDB method.

Plot the book value curves for DDB and SL depreciation.