You will also be required to use formulas for any totals in computing the book value. The lack of formulas will result in a lower grade. Hardy Office Services purchased a new printer/copier system in Year 1 for $80,000. It is expected to have a four year useful life and a salvage value of $8,000 and it is expected to make 500,000 copies during that time. Actual usage (copics) for the four years in order arc: 130,000/110,000/ 145,000 / 125,000 Calculate the depreciation expense and book value for each of the five years, assuming the use of straight-line depreciation. Calculate the depreciation expense and book value for cach of the five ycars, assuming the use of double-declining-balance depreciation. c Would the use of one depreciation method over another produce a different amount of cash flow for any year? Why or why not? d Assume that Hardy Office Services sold the copier system at the beginning of the fifth year for $15,000. Compute the amount of gain or loss using each depreciation method. Please be sure to indicate if it is a gain or loss. e Assume that instead of selling the copier at the end of its useful life, Hardy decided that it would sell the machine carly while it still had a higher market value and they could receive a larger amount for it. Compute the amount of gain or loss Hardy would recognize if the copier was sold on the first day of Year 4 for $25,000. Please be sure to indicate if it is a gain or loss. Answers: Striaght-Line Year 1 Year 2 | Year 3 Year 4 Double-Declining Year 1 Year 2 Year 3 Year 4 Units-Of-Production Year 1 Year 2 | Year 3 Year 4 Depreciation Expense Historical Cost Accum. Depr Book Value C d Gain/Loss on Sale : Straight-Line e Gain/Loss on Sale : Straight-Line Gain/Loss on Sale: Double-declining Gain:Loss on Sale: Double-declining Gain/Loss on Sale: Units-of-Production Gain Loss on Sale: Units-of-Production You will also be required to use formulas for any totals in computing the book value. The lack of formulas will result in a lower grade. Hardy Office Services purchased a new printer/copier system in Year 1 for $80,000. It is expected to have a four year useful life and a salvage value of $8,000 and it is expected to make 500,000 copies during that time. Actual usage (copics) for the four years in order arc: 130,000/110,000/ 145,000 / 125,000 Calculate the depreciation expense and book value for each of the five years, assuming the use of straight-line depreciation. Calculate the depreciation expense and book value for cach of the five ycars, assuming the use of double-declining-balance depreciation. c Would the use of one depreciation method over another produce a different amount of cash flow for any year? Why or why not? d Assume that Hardy Office Services sold the copier system at the beginning of the fifth year for $15,000. Compute the amount of gain or loss using each depreciation method. Please be sure to indicate if it is a gain or loss. e Assume that instead of selling the copier at the end of its useful life, Hardy decided that it would sell the machine carly while it still had a higher market value and they could receive a larger amount for it. Compute the amount of gain or loss Hardy would recognize if the copier was sold on the first day of Year 4 for $25,000. Please be sure to indicate if it is a gain or loss. Answers: Striaght-Line Year 1 Year 2 | Year 3 Year 4 Double-Declining Year 1 Year 2 Year 3 Year 4 Units-Of-Production Year 1 Year 2 | Year 3 Year 4 Depreciation Expense Historical Cost Accum. Depr Book Value C d Gain/Loss on Sale : Straight-Line e Gain/Loss on Sale : Straight-Line Gain/Loss on Sale: Double-declining Gain:Loss on Sale: Double-declining Gain/Loss on Sale: Units-of-Production Gain Loss on Sale: Units-of-Production
