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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:12.19 Exactly 10 years ago, Boyditch Professional Asso-
ciates purchased $100,000 in depreciable assets
with an estimated salvage of $10,000. For tax de-
preciation the SL method with n = 10 years was
used, but for book depreciation, Boyditch applied
the DDB method with n = 7 years and neglected
the salvage estimate. The company sold the assets
today for $12,500.
a. Compare this sales amount with the book val-
ues using SL and DDB methods.
b. If a salvage of $12,500 had been estimated ex-
actly 10 years ago, determine the depreciation
for each method in year 10.
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- Aa.2arrow_forwardd. The depreciation deduction for year 11 of an asset with a 20-year useful life is $3,600. If the salvage value of the asset was estimated to be zero and straight line depreciation was used to calculate the depreciation deduction for year 11, the initial cost of this asset is most closely equal to which of the following values? (a) $42,000 (b) $67,750 $72,500 (d) $80,000 e. Consider the following data extracted from an After Tax Cash Flow calculation. Before Tax Cash Flow = $22,500 Loan Principal Payment = $7,434 Loan Interest Payment = $892 MACRS Depreciation Deduction = $7,405 Taxes Due = $5,397 Which of the following is closest to the After Tax Cash Flow? (a) $1,372 $8,777 (c) $8,806 (d) $16,211arrow_forward2arrow_forward
- Please help me with this question: Holmes Packaging sold a machine for $49,500. The company bought this machine for $120,000 seven years ago and was depreciating it on a straight-line basis over ten years to a $12,000 salvage value. What is the gain (loss) that Holmes Packaging should report?arrow_forward2 Blue inc. Purchases and assets for $100,000. The asset has a useful life of ten years and no salvage value. In year 6, Blue inc. sold the assets for $60,000. What is the reported gain or loss for this transaction assuming straight-line depreciation. Gain Loss Gain 20,000arrow_forwardN6 A new machine tool is being purchased for $260,000 and is expected to have a $36,000 salvage value at the end of its 5-year useful life. Assume any remaining depreciation is claimed in the last year. Compute the depreciation schedules for this capital asset, using the following methods: (a) Straight-line depreciation (b) MACRS Note: No statement is required for this problem.arrow_forward
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