The following information relates to Hawkrigg Corporation’spurchase of equipment on 15 June 20X7: Invoice price..................... $ 210,000 Discount for early payment (if paidby 30 June)....... $ 1,050 Shipping costs..................... $2,000 Installation ...................... $ 1,500 Testing........................ $ 3,000 The equipment was installed andtested during the week of 22 June 20X7. Hawkrigg paid the invoiceprice on 1 July 20X7. The equipment was ready for use on 30 Juneand put into production on 3 July 20X7. Hawkrigg management usesstraight- line depreciation for the company’s equipment and expectsto use the asset for six years. he estimated residual value iszero. Their fiscal year end is 31 December. Required: 1. What isthe book value of the equipment after installation? 2. Computedepreciation expense for 20X7, using the straight- line method,under each of the following assumptions: a. Exact, to the closestmonth b. Full first- year convention c. Half- year convention 3.Calculate depreciation expense for both 20X7 and 20X8 under each ofthe methods in requirement (2), using double- declining balance (DDB) depreciation.
