Zimmer Company owns an executive plane that originally cost $1,280,000. It has recorded straight-line depreciation on the plane for seven full years, calculated assuming a $160,000 expected salvage value at the end of its estimated 10-year useful life. Zimmer disposes on the plane at the end of seventh year.

1.Use a table and draw graphs to compare depreciation expense, net asset value, income tax expense, and cumulative income tax expense for the 7 years when Zimmer Company use different depreciation method:

a.Using the current straight-line depreciation method, what is the depreciation expense, accumulative depreciation expense, and the net book value at the end of each of the 7 years?

b.If the company use double declining balance depreciation method, what will be the depreciation expense, accumulative depreciation expense, and the net book value at the end of each of the 7 years?

c.If the company use sum-of-year-digit depreciation method, what will be the depreciation expense, accumulative depreciation expense, and the net book value at the end of each of the 7 years?

d.If the effective income tax rate is 25% and income from continuing operating before tax and depreciation under straight line method is $2,000,000 in each of the 7 years, what is the income tax expense and accumulative income tax at the end of each of the 7 years. What if the company use sum of year digit method?

2.Assume the company use straight-line depreciation method, wow much gain or loss is reported at disposal if the sale price is

a.A cash amount equal to the plan's net book value;

b.$285,000 cash

c.$700,000 cash