Problem 5 (16 points) On January 1, 2012, Sparks Company purchased for $2,880,000 snow-making 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 (a) Complete the form below by determining the depreciation expense and year-end book values for 2012 and 2013 using the 1. sum-of-the-years'-digits method. 2. double-declining balance method. Sum-of-the-Years'-Digits Method 2013 $2,880,000 2012 Equipment Less: Accumulated Depreciation Year-End Book Value $2,880,000 Depreciation Expense for the Year Double-Declining Balance Method Equipment Less: Accumulated Depreciation $2,880,000 $2,880,000 Year-End Book Value Depreciation Expense for the Year (b) Assume the company had used straight-line depreciation during 2012 and 2013. On Januar- 1, 2014, the company determined that the equipment would be useful to the company for tw more years asy Salvage value is estimated at that time to be $160,000. Compu the amount of depreciation expense for the 2014 income statement. (c) Assume that this asset is 7 year property for tax purposes. Using the chart below, Calculate the depreciation expense for 2013 and 2014. Chart: 7 year property Recovery year Factor 14.29 1 24.49 17.49 12.49 4 8.93 5 8.92 8.93 4.46 8 2m n67co