Q5

Ca January 8, 2021 Scon Compary paid $245,000 for a compothor 5ystom. In addion to the basic purchase price, the company paid a setup foe of $300, sales tar of $6.400, and 527,600 for a wpecial platborm on witich to place the computer. Sootrs management estimates that the computee well remain in service tor fivo years and have a fosidual vilue of $20.000. The computer will process 45,000 documents the frat yoa, with annual processing decreasing by 2,500 documents during each of the neut fout yean (that is. 42,500 documents in 2022 ; 40,000 documents in 2023 . and so on). For heb with deelding which depreciation method to use, the company president has requeneded a dopreciation schedule for each of the three depreciation meehods. if rounding it necescary, vie two decimal places for the depreciation amount per document Read the requicements Requirement 1. For each of the generaly ascepted depreciaton methods, prepare a deprecialon schedulo showing asset cost, depeecation expense, accumulated depreciation, and asset book value deomal places.) Requirements 1. For each of the Genwraly accepled depresation methods, prepare a depreciaton schedule showing asset cost. depereiation erpente, accumblated deprecition, and asset book valve 2. For fravilal reporting purposes, scott uses the depreciation method that mavimites reported insone in the aady? years ot an assers use. For income tax purposes, the compacy uses the detreciobon method that minimizas income tax perments in those eaty years. Consider the frist year Soot Co. ves the eomputar. ldenety the deprociation methods that meet Sootrs objectives. assuming the income tax avtherites parme the use of any of the inethode. 1. Net cach provided by operations before income tax $156,000 for the computers frat year. The compaivh: income tax rate is 35\%. For the two depreciaton menods ident fed in requirerent 2, compare the net income and net cash provided by ogecations (caph fow) Show which method gives the net income advantage and which method gives the cash fow advantage