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7. Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table that follows lists the relevant cost items for this purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The SV for depreciation purposes is equal to 25% of the hardware cost. Cost Item Hardware Training Installation Cost $160,000 $15,000 $15,000 50 a. What is the BV of the device at the end of year three if the SL depreciation method is used? b. Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining three years). What is the device's BV at the end of four years? 8. A special-purpose machine is to be depreciated as a linear function of use (units-of- production method). It costs $35,000 and is expected to produce 150,000 units and then be sold for $5,000. Up to the end of the third year, it had produced 60,000 units, and during the fourth year it produced 18,000 units. What is the depreciation deduction for the fourth year and the BV at the end of the fourth year?

7. Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table that follows lists the relevant cost items for this purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The SV for depreciation purposes is equal to 25% of the hardware cost. Cost Item Hardware Training Installation Cost $160,000 $15,000 $15,000 50 a. What is the BV of the device at the end of year three if the SL depreciation method is used? b. Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining three years). What is the device's BV at the end of four years? 8. A special-purpose machine is to be depreciated as a linear function of use (units-of- production method). It costs $35,000 and is expected to produce 150,000 units and then be sold for $5,000. Up to the end of the third year, it had produced 60,000 units, and during the fourth year it produced 18,000 units. What is the depreciation deduction for the fourth year and the BV at the end of the fourth year?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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7. Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table that follows lists the relevant cost items for this purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The SV for depreciation purposes is equal to 25% of the hardware cost. Cost Item Hardware Training Cost $160,000 $15,000 $15,000 Installation 50 a. What is the BV of the device at the end of year three if the SL depreciation method is used? b. Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining three years). What is the device's BV at the end of four years? 8. A special-purpose machine is to be depreciated as a linear function of use (units-of- production method). It costs $35,000 and is expected to produce 150,000 units and then be sold for $5,000. Up to the end of the third year, it had produced 60,000 units, and during the fourth year it produced 18,000 units. What is the depreciation deduction for the fourth year and the BV at the end of the fourth year? s USE
Transcribed Image Text:7. Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table that follows lists the relevant cost items for this purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The SV for depreciation purposes is equal to 25% of the hardware cost. Cost Item Hardware Training Cost $160,000 $15,000 $15,000 Installation 50 a. What is the BV of the device at the end of year three if the SL depreciation method is used? b. Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining three years). What is the device's BV at the end of four years? 8. A special-purpose machine is to be depreciated as a linear function of use (units-of- production method). It costs $35,000 and is expected to produce 150,000 units and then be sold for $5,000. Up to the end of the third year, it had produced 60,000 units, and during the fourth year it produced 18,000 units. What is the depreciation deduction for the fourth year and the BV at the end of the fourth year? s USE
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