1. Z Corp. purchased new equipment for $900,000. Other costs connected with the purchase were as follows. The equipment has a useful life of 5 years and is expected to have a value of $140,000 at the end of five years.

State sales tax	72,000
Freight costs	8,000
Insurance while in transit	3,000
Minor repairs throughout the year	5,000
Installation costs	7,000
Insurance for the first year of operations	5,000

Required:

1. Determine the capitalized cost of the equipment.
2. Calculate the equipments depreciation using the straight-line and Double Declining balance methods if the equipment is used for five years.
3. Assume the equipment is sold after the end of the third year for $425,000. Calculate the gain or loss on the sale using both methods of depreciation