(a) 1.

Depreciation Base Computation:

Purchase price...............................

$85,000

Less: Purchase discount (2%) ......

1,700

Freight$in ........................................

800

Installation .....................................

3,800
87,900

Less: Salvage value .....................

1,500

Depreciation base .........................

$86,400

2014.Straight line: ($86,400 8 years) X 2/3 year = $7,200

2.

Sum$of$the$years$digits for 2015

Machine Year

Total Depreciation

8/36 X $86,400 =

$19,200

7/36 X $86,400 =

$16,800

2014

2015

$12,800

$6,400
11,200
$17,600

$19,200 X 2/3 = $12,800

$19,200 X 1/3 = $ 6,400
$16,800 X 2/3 = $11,200
3.

Double$declining$balance for 2014

($87,900 X 25% X 2/3) = $14,650

(b)

An activity method.