Problem
The initial cost of equipment is $1,000,000. Assuming a life of five years and a resale value of $200,000,
a. Calculate the depreciation and the book value of this equipment for the next 7 years. Use both straight-line and double declining balance depreciation methods.
b. If the equipment is sold at year 4 for $400,000, what is the capital gain or loss using both of the above mentioned methods of depreciation?