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Q-1: Sobar Company acquired a plant asset at the beginning of year 1. The asset has an estimated service life of 5 years. An employee

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Q-1: Sobar Company acquired a plant asset at the beginning of year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years-digits method, and (3) the double- declining-balance method. Years Straight line $ 9,000 Double declining $20,000 1 2 9,000 12,000 3 9,000 Sum of years digit $15,000 12,000 9,000 6,000 3,000 $45,000 7,200 4,320 9,000 5 9,000 $45,000 1,480 $45,000 Total Required: Answer the following questions. a. What is the cost of the asset being depreciated? b. What amount, if any, was used in the depreciation calculations for the residual value for this asset? c. Which method will produce the highest charge to income in year 1? d. Which method will produce the highest charge to income in year 4? e. Which method will produce the highest book value for the asset at the end of year 3? f. If the asset is sold at the end of year 3, which method would vield the highest gain (or lowest loss) on disposal of the asset

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