Sunrise Development Industries purchased a depreciable asset for $50 000 on 1 July 2016. The asset has a five-year useful life and a $10 000 estimated residual value. The company will use the straight-line method of depreciation for book purposes. However, Sunrise will use the reducing-balance method for tax purposes. Assume a tax rate of 30 per cent.

Prepare depreciation schedules using the straight-line and reducing-balance methods (at 1.5 times the straight-line rate) of depreciation for the useful life of the asset. b Calculate the tax savings for the financial year ended 30 June 2017 from the use of the accelerated depreciation method for tax purposes. c Under the straight-line method of depreciation, what is the gain or loss if the equipment is sold (i) at the end of June 2019 for $30 000 or (ii) at the end June 2020 for $16 000? d How is the gain or loss on the disposal of the equipment presented in the financial statements assuming no revaluations?