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 23% 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% DB Year 1 2 3 4 Book values at end of year 4 SL $ $ 200% DB $ $ $ ACCER A Cost Item Hardware Training Installation Cost $160,000 $16,000 $17,000

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 23% 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% DB Year 1 2 3 4 Book values at end of year 4 SL $ $ 200% DB $ $ $ ACCER A Cost Item Hardware Training Installation Cost $160,000 $16,000 $17,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

**Depreciation Calculation for Bar Code Scanning Device**

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 23% of the hardware cost.

**Cost Items:**
- Hardware: $160,000
- Training: $16,000
- Installation: $17,000

**Tasks:**

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 depreciations and book values (Round to the nearest dollar)**

| Year | SL | 150% DB | 200% DB |
|------|------|---------|---------|
| 1 | $ | $ | $ |
| 2 | $ | $ | $ |
| 3 | $ | $ | $ |
| 4 | $ | $ | $ |

- **Book values at end of year 4:**
SL: $______
150% DB: $______
200% DB: $______

Use these calculations to evaluate the most suitable depreciation method for financial analysis and decision-making processes regarding asset management.

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