Cisco Systems is purchasing a new bar code-scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 25% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is (Round to the nearest dollar) (b) Annual depreciaitions and book values: (Round to the nearest dollar) 150% DR 200% DR www Cost Item Hardware Training Installation Cost $165,000 $16,000 $14,000
Cisco Systems is purchasing a new bar code-scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 25% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is (Round to the nearest dollar) (b) Annual depreciaitions and book values: (Round to the nearest dollar) 150% DR 200% DR www Cost Item Hardware Training Installation Cost $165,000 $16,000 $14,000
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 14P
Related questions
Question
![Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table on the right lists
the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is
expected to be about 25% of the hardware cost.
a. What is the cost basis of the device?
b. What are the annual depreciations of the device if
(i) the SL method is used?
(ii) the 150% DB method is used?
(iii) the 200% DB method is used?
c. Calculate the book values of the device at the end of 4 years using all the methods above.
Answers:
(a) The cost basis of the device is
(Round to the nearest dollar)
(b) Annual depreciaitions and book values: (Round to the nearest dollar)
Year
1
2
3
4
Book values at
end of year 4
SL
$
150% DB
$
200% DB
$
$
C
Cost Item
Hardware
Training
Installation
Cost
$165,000
$16,000
$14,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3fc923da-597d-435e-8082-d40f278cf098%2Fc6c2d661-3f29-403b-91e7-5e3e6f0bb46b%2Fjnby0rd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table on the right lists
the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is
expected to be about 25% of the hardware cost.
a. What is the cost basis of the device?
b. What are the annual depreciations of the device if
(i) the SL method is used?
(ii) the 150% DB method is used?
(iii) the 200% DB method is used?
c. Calculate the book values of the device at the end of 4 years using all the methods above.
Answers:
(a) The cost basis of the device is
(Round to the nearest dollar)
(b) Annual depreciaitions and book values: (Round to the nearest dollar)
Year
1
2
3
4
Book values at
end of year 4
SL
$
150% DB
$
200% DB
$
$
C
Cost Item
Hardware
Training
Installation
Cost
$165,000
$16,000
$14,000
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