Prepare a depreciation schedule to be used for tax purposes for a $110,000 railroad spur using the 200% declining balance method and a half-year convention
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- 24. Five year property costing $25,000 was placed in service on January 11, 2021 and $75,000 of five year property was also placed in service on December 4, 2021. All property is depreciated using MACRS. Neither IRC 179 nor bonus depreciation is claimed. What will be the 2021 depreciation deduction for the $25,000 asset? A $ 630 B 5,000 3,050 D 12,500 E None of the aboveTrue or false ________ 13. The proceeds from the sale of a fixed assets would be credited to sales accounts ________ 14, The straight line method is the allocation of depreciation where the amount of depreciation is reduced form year to year ________ 15. Replacement method is a method of calculating depreciation.Prepare a depreciation schedule to be used for tax purposes for a $110,000 railroad spur (track) using the 200% declining-balance method and the midquarter convention. The equipment was placed in service during the second quarter of the company’s tax year. Ignore any special depreciation allowances. (Recovery period = 7 years)
- A certain company makes it the policy that for any new piece of equipment the annual depreciation cost should not exceed 10% of the original cost at any time with no salvage value. Determine the length of service life necessary if the depreciation method used is: (a) Straight Line Method (b) Sinking Fund Method (c) Sum of the Years Digit Method.Based on the above and the result of your audit, answer the following: (Disregard tax implications) 1. How much is the total depreciation expense for 2020?a. P166,600 c. P161,200b. P177,498 d. P164,100 2. How much is the adjusted cost of property, plant and equipment as of December 31, 2020?a. P1,340,000 c. P1,230,000b. P1,055,000 d. P1,165,000 3.How much is the carrying amount of property, plant and equipment as of December 31, 2020?a. P435,160 c. P763,440b. P729,840 d. P860,400Which of the following will cause a difference in book depreciation and federal depreciation? Choosing to depreciate a class of property using straight-line on the federal return and straight-line on the books. Depreciating property with a useful life of less than one year. Electing to take a Section 179 deduction on eligible property. Placing property in service mid-year.
- The Minister of Finance is reviewing the depreciation regulations. Currently the Canadian Income Tax Act requires that intangible assets, such as franchises, patents and copyrights, be depreciated on a straight-line basis. The maximum annual deprecation charge is calculated by fully depreciating the intangible asset over seven years. The Minister is considering changing this to be consistent with all other assets and simply having a CCA class for intangible assets with a CCA rate of 75%. The Minister has asked you to determine the effect that this change would have on a start-up engineering company with a valuable patent. Consider a patent that cost $700 000 to establish. As with many start-up engineering companies, assume that the new company will not be profitable in the first year but expect profitability thereafter. Given that the start-up company has an income tax rate of 30% and an after-tax cost of capital of 15%, what is the after-tax cost of this patent under both approaches?…*Note: These amounts are used for depreciation calculations. Assume further that Mendoza is subject to a 3 0% income tax, both for ordinary income and gains/losses associated with disposal of machinery, and that all cash flows occur at the end of the year, except for the initial investment. Assume that straight-line depreciation is used for tax purposes and that any tax associated with the disposal of machinery occurs at the same time of the related transaction. Required: Determine relevant cash flows (after-tax) at time of purchase of the new machine (i.e., time 0: January 1, 2019). Determine the relevant (after-tax) cash inflow each year of project operation (i.e., at the end of each of years 1 through 5). Determine the relevant (after- tax) cash inflow at the end of the project's life (i.e., at the project's disposal time, December 31, 2023). Determine the undiscounted net cash flow (after tax) for the new machine and determine whether on this basis the old machine should be…A certain company makes it a policy that for any new piece of equipment the annual depreciation cost should not exceed 10% of the original cost at any time with no salvage value. Determine the length of service life necessary if the depreciation method used is: a. Straight Line Method b. Sinking Fund Method at 8% c. SYD method
- Ayayai Company owns a 7,500-acre tract of timber purchased in 2006 at a cost of $1,534 per acre. At the time of purchase, the land was estimated to have a value of $354 per acre without the timber. Ayayai Company has not logged this tract since it was purchased. In 2020, Ayayai had the timber cruised. The cruise (appraiser) estimated that each acre contained 9,440 board feet of timber. In 2020, Ayayai built 10 miles of roads at a cost of $7,800 per mile. After the roads were completed, Ayayai logged and sold 4,130 trees containing 1,003,000 board feet. (a) Your answer is correct. Determine the cost of timber sold related to depletion for 2020. (Round answer to O decimal places, eg. 5,125.) Cost of timber sold $ 125375 eTextbook and MediaAssume the same information as in RE11-3, except that Albany Corporation purchased the asset on April 1, Year 1. Calculate the depreciation for Year 1 and Year 2 using the double-declining-balance method. Round to the nearest dollar.Problem 12-33 Replacement decision analysis (LO12-4] new Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $78,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $34,800. A new piece of equipment will cost $230,000. It also falls into the five-year category for MACRS depreciation. Assume the new equipment would provide the following stream of added cost savings for the next six years. Use Table 12–12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Cash Year Savings $ 61,000 1 51,000 3 49,000 47,000 44,000 33,000 4 The firm's tax rate is 25 percent and the cost of capital is 10 percent.