Question: Karenjit Kaur Studio purchases a Professional Red Camera. Book value of that camera was $50,000. The purchase included a 13% tax. The supplier offered the company a 16% Discount on the base price. No transportation charges were there but the technicians had to be paid $3,000 for training of employees regarding how to use the camera. Requirements
1. Calculate the total cost of the camera.
2. Calculate depreciation in straight line method assuming the camera have a useful life of 7 years and a residual value of $5000. If the machine was sold in the 4th year, what would its book value be?
3. Calculate depreciation using the diminishing balance method assuming the rate of depreciation is 20% annually. What will be the book value if it is sold after 5 years?
4. Assume that the camera can shoot for 300000 hours in its life time. If in the first year the camera Shot for 97,000 hours, how much is the depreciation for the first year