A large profitable corporation bought a small jet plane for use by the firm's executives in January. The plane cost $1.5 Million and, for depreciation purposes, is assumed to have a zero salvage value at the end of five years. Compute the MACRS depreciation schedule.
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- A construction company is considering changing its depreciation from the MACRS method to the historical SL method for a general purpose hauling truck. The cost basis of the truck is $100,000, and the expected salvage value for depreciation purposes is $8,000. The company will use the truck for eight years and will depreciate it over this period of time with the SL method.What is the difference in the amount of depreciation that would be claimed in year five (i.e., MACRS versus SL)?The RX Drug Company has just purchased an encapsulating machine for $76,000. The plant estimates the machine will have a five-year useful life and no salvage value. Compute the depreciation for all five years using Sum-of-Years Digits depreciation.The XYZ Block Company purchased a new office computer and other depreciable computer hardware for $12,000. During the third year, the computer is declared obsolete and is donated to the local community college. Using an interest rate of 10%, calculate the Present Worth of the depreciation deductions. Assume that no salvage value was initially declared and that the machine was expected to last 5 years. Round to nearest dollar. Use STRAIGHT LINE DEPRECIATION to calculate depreciation schedule.
- Colquhoun International purchases a warehouse for $325,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. A. Calculate annual depreciation expense for the first four years. $fill in the blank b2a4a0fccfb4fa2_1 B. Determine the depreciation expense for the final fifteen years of the asset’s life. $fill in the blank b2a4a0fccfb4fa2_2 C. Prepare the journal entry for year five. If an amount box does not require an entry, leave it blank.Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate: At time of purchase, annual depreciation was ___ Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the asset’s life: Original cost Depreciation previously taken Book value at beginning of year five Salvage value Revised remaining depreciable cost Revised remaining useful life 15 years Revised annual depreciation Create the depreciation expense journal entry for year five: DR CRDelta Machine Company purchased a computerized assembly machine for $97,000 on January 1, Year 1. Delta Machine Company estimated that the machine would have a life of four years and a $19,000 salvage value. Delta Machine Company uses the straight-line method to compute depreciation expense. At the beginning of Year 3, Delta discovered that the machine was quickly becoming obsolete and would have little value at the end of its useful life. Consequently, Delta Machine Company revised the estimated salvage to only $3,000. It did not change the estimated useful life of the machine. Compute the depreciation expense for each of the four years.
- Colquhoun International purchases a warehouse for $321,000. The best estimate of the salvage value at the time of purchase was $16,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. A. Calculate annual depreciation expense for the first four years. B. Determine the depreciation expense for the final fifteen years of the asset’s life. When revising deprecation schedules, the book value is used as the adjusting base to apply the new changes to when determine the revised yearly depreciation amount. C. Prepare the journal entry for year five. If an amount box does not require an entry, leave it blank. Depreciation Expense fill in the blank 0aebd6fb4003f89_2 fill in the blank 0aebd6fb4003f89_3 Accumulated Depreciation-Warehouse fill…Colquhoun International purchases a warehouse for $301,000. The best estimate of the salvage value at the time of purchase was $16,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. A. Calculate annual depreciation expense for the first four years. $? B. Determine the depreciation expense for the final fifteen years of the asset’s life. $? C. Prepare the journal entry for year five. If an amount box does not require an entry, leave it blank.Colquhoun International purchases a warehouse for $332,000. The best estimate of the salvage value at the time of purchase was $17,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. A. Calculate annual depreciation expense for the first four years. $fill in the blank ae55fc07ff8d04f_1 B. Determine the depreciation expense for the final fifteen years of the asset’s life. $fill in the blank ae55fc07ff8d04f_2 C. Prepare the journal entry for year five. If an amount box does not require an entry, leave it blank. fill in the blank fill in the blank fill in the blank fill in the blank
- Colquhoun International purchases a warehouse for $338,000. The best estimate of the salvage value at the time of purchase was $13,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. A. Calculate annual depreciation expense for the first four years. B. Determine the depreciation expense for the final fifteen years of the asset's life. $4 C. Prepare the journal entry for year five. If an amount box does not require an entry, leave it blank. Accumulated Depreciation-Warehouse Cash Depreciation Expense Inventory PatentColquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the asset’s life, and create the journal entry for year five.Eight years ago, a company purchased an injection molding machine at $40,000. It has been depreciated according to conventional straight-line method (book depreciation) over a 12-year life. The estimated salvage value at the end of 12 years (from the purchase) was $4,000. The machine has a current market value of $15,000. Assume the company purchases a new machine at a cost of $50,000 with a salvage value of $5,000 and a 10 year life. The firm's income tax rate is 40% and their discount rate is 10%. What is the net depreciation tax shield during year three?