The company founder hires us as consultants and asks that we oversee the accounting for new equipment purchased on January 1. The founder wants to know the implications of different depreciation methods and estimates for the companys financial statements. Those statements will be used to attract financing from new investors and creditors. At the end of the equipments first year in operation, we are given the following Tableau Dashboard.

1(a). Assume the company uses straight-line depreciation for the equipment. At the beginning of the second year, we determine that the equipment has only two more years of remaining useful life. Compute the equipments book value at the end of its first year. 1(b). Assume the company uses straight-line depreciation for the equipment. At the beginning of the second year, we determine that the equipment has only two more years of remaining useful life. Compute the depreciation for the second year given the revised useful life estimate. 2. At the end of the equipments useful life, the company plans to sell it. Record the sale of equipment at the end of its useful life for (a) $12,000 cash and (b) $6,000 cash.

Estimated Useful Life of Assets Purchase Price & Estimated Salvage Value 20 Building Equipment Truck $70,000 16 $60,000 $50,000 12 $40,000 Years $30,000 8 $20,000 4 $10,000 $0 0 Purchase Salvage Purchase Salvage Purchase Salvage Price Value Price Value Price Value Building Equipment Truck Actual & Estimated Units-of-Production Year 1 Production Actual Year 2 Production Estimated Year 3 Production Estimated Year 4 Production Estimated 0 25,000 50,000 75,000 100,000 125,000 Total Units to be produced