WITH DETAIL STEPS PLEASE

Harold Homes Limited acquires a new equipment at a cost of $60,000. The estimated salvage value is $4,000 and estimated life of 5 years.

a) Use straight-line method, the double declining balance method, and the sum-of-years-digit method to determine

i) Annual depreciation for each of the estimated useful life;

ii) The accumulated depreciation at the end of each year;

iii) The book value at the end of each year.

b) Calculate the annual depreciation (for tax purposes). Assume that the CCA rate is 25%.

c) During the first month of the 4th year, the equipment was traded in for a brand-new equipment at $80,000. The trade-in allowance was $10,000. Use CCA rate of 25% to calculate the CCS in the 4th year, and UCC at the end of that year (assume that salvage value equals the trade-in value).