(b1)Compute accumulated depreciation by using MACRS and optional straight-line method for the 3-year period ending December31, 2026. Ignore present value considerations.MethodsMACRSOptional straight-line method$LAeTextbook and Media2024LAAccumulated Depreciation$$2025$tA2026Assistance Used Current Attempt in ProgressMOn January 1, 2024, Nash Company, a small machine-tool manufacturer, acquired for $1,190,000 a piece of new industrial equipment.The new equipment had a useful life of 5 years, and the salvage value was estimated to be $72,200. Nash estimates that the newequipment can produce 12,000 machine tools in its first year. It estimates that production will decline by 1,140 units per year over theremaining useful life of the equipment.The following depreciation methods may be used: (1) straight-line, (2) double-declining-balance, (3) sum-of-the-years'-digits, and (4)units-of-output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation.(a1)

Name: (b1)Compute accumulated depreciation by using MACRS and optional stra
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: (b1)Compute accumulated depreciation by using MACRS and optional straight-line method for the 3-year period ending December31, 2026. Ignore present value considerations.MethodsMACRSOptional straight-line method$LAeTextbook and Media2024LAAccumulated

The depreciation under the MACRS is the rule and method which is used to compute the depreciation…

Business

Accounting

Compute accumulated depreciation by using MACRS and optional straight-line method for the 3-year period ending December 31, 2026. Ignore present value considerations. Methods MACRS 30 me Optional straight- line method $ $ 2024 $ $ Accumulated Depreciation 2025 $ $ 2026

Compute accumulated depreciation by using MACRS and optional straight-line method for the 3-year period ending December 31, 2026. Ignore present value considerations. Methods MACRS 30 me Optional straight- line method $ $ 2024 $ $ Accumulated Depreciation 2025 $ $ 2026

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter10: Long-lived Tangible And Intangible Assets

Section: Chapter Questions

Problem 19E

See similar textbooks

Similar questions

Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $23,100,000 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 90,000 tons Year 3: 100,000 tons Year 4: 110,000 tons Year 5: 130,000 tons Calculate the depletion expense for the next five years, and create the journal entry for year one.
Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. With DEPREC5 still on the screen, click the Chart sheet tab. This chart shows the accumulated depreciation under all three depreciation methods. Identify below the depreciation method that each represents. Series 1 _____________________ Series 2 _____________________ Series 3 _____________________ When the assignment is complete, close the file without saving it again. Worksheet. The problem thus far has assumed that assets are depreciated a full year in the year acquired. Normally, depreciation begins in the month acquired. For example, an asset acquired at the beginning of April is depreciated for only nine months in the year of acquisition. Modify the DEPREC2 worksheet to include the month of acquisition as an additional item of input. To demonstrate proper handling of this factor on the depreciation schedule, modify the formulas for the first two years. Some of the formulas may not actually need to be revised. Do not modify the formulas for Years 3 through 8 and ignore the numbers shown in those years. Some will be incorrect as will be some of the totals. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the completed file as DEPRECT. Hint: Insert the month in row 6 of the Data Section specifying the month by a number (e.g., April is the fourth month of the year). Redo the formulas for Years 1 and 2. For the units of production method, assume no change in the estimated hours for both years. Chart. Using the DEPREC5 file, prepare a line chart or XY chart that plots annual depreciation expense under all three depreciation methods. No Chart Data Table is needed; use the range B29 to E36 on the worksheet as a basis for preparing the chart if you prepare an XY chart. Use C29 to E36 if you prepare a line chart. Enter your name somewhere on the chart. Save the file again as DEPREC5. Print the chart.
Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are two million tons of ore within the mine. Underwoods paid $46,000,000 for the rights and expects to harvest the ore over the next fifteen years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 900,000 tons Year 3: 400,000 tons Year 4: 210,000 tons Year 5: 150,000 tons Calculate the depletion expense for the next five years and create the journal entry for year one.
A manufacturing company is considering acquiring a new injection-molding machine ata cost of $150,000. Because of a rapid change inproduct mix, the need for this particular machine isexpected to last only eight years, after which timethe machine is expected to have a salvage value of$10,000. The annual operating cost is estimatedto be $11,000. The addition of the machine to thecurrent production facility is expected to generatean annual revenue of $48,000. The firm has only$100,000 available from its equity funds, so it mustborrow the additional $50,000 required at an interest rate of 10% per year with repayment of principal and interest in eight equal annual amounts. Theapplicable marginal income tax rate for the firm is40%. Assume that the asset qualifies for a sevenyear MACRS property class.(a) Determine the after-tax cash flows.(b) Determine the NPW of this project atMARR = 14%.
Apharmaceutical company has some existing semiautomated production equipment that they are considering replacing This equipment has a present MV of $55,000 and a BV of $33,000. It has five more years of straight-line depreciation available ( kept) of $6,600 per year, at which time its BV would be $0. The estimated MV of the equipment five years from now (in year-zero dollars) is $18,000. The MV rate of increase on this type of equipment has been averaging 4 2% per year. The total operating and maintenance and other related expenses are averaging $26,500 (AS) per year New automated replacement equipment would be leased. Estimated operating and maintenance and related company expenses for the new equipment are $11,900 per year. The annual leasing cost would be $24,100. The after-tax MARR (with an inflation component) is 10% per year (): -25%; and the analysis period is five years, Based on an after-tax, AS analysis, should the replacement be made? Base your answer on the actual IRR of…
A company has decided to replace its inspection machine with an advanced one. The advanced machine costs $15,000 and will have operating costs of $3,600 in the first year, increasing by $2,000 per year thereafter. The expected salvage value of the new machine is $6,000 at the end of the first year and will decline by 10% of the preceding S.V. each year. Find the missing values in the following table and determine the economic life of the new machine. Total Cost (8%) CR (8%) OC (8%) 3,600 1 10,200 13,800 2 ? ? ... .... .. 3 4332.36 5,495.82 ? 4 ? 6,406.46 ? .......... . 3086.31 7,293.42 10,379.73 OPTIMAL n = A+ta ch Cilo
A machine purchased 1 year ago for $85,000 costs more to operate than anticipated. When purchased, the machine was expected to be used for 10 years with annual maintenance costs of $22,000 and a $10,000 salvage value. However, last year, it cost the company $35,000 to maintain it, and these costs are expected to escalate to $36,500 this year and increase by $1500 each year thereafter. The market value is now estimated to be $85,000 − $10,000k, where k is the number of years since the machine was purchased. It is now estimated that this machine will be useful for a maximum of 5 more years. A replacement study is to be performed now. Determine the values of P, n, AOC, and S of this defender.
A highway construction firm purchased a particular earthmoving machine 3 years ago for $125,000. The salvage value at the end of 8 years was estimated to be 35% of first cost. The firm earns an average annual gross revenue of $105,000 with the machine and the average annual operatingcosts have been and are expected to be $65,000. The firm now has the opportunity to sell the machine for $70,000 and subcontract the work normally done by the machine over the next 5 years. If the subcontracting is done, the average annual gross revenue will remain $105,000 but the subcontractor charges $85,000/end-of-year for these services. If a 15% rate of return before taxes is desired, use a cash flow approach to determine by the annual worth method whether or not the firm should subcontract.
X Company is using a fully depreciated machine having a current market value of 20,000. The salvage value of the machine eight years from now would be zero. The company is considering replacing this machine by a new one costing 1,02, 500, and having an estimated salvage value of 12,500. With the use of the new machine, annual sales are expected to increase from 80,000 to 92, 500. Operating efficiencies with the new machine will save 12,500 per year as operating expenses. Depreciation will be charged on written - down basis at 25 per cent. The cost of capital is 11 per cent. The new machine has a 8-year life and the company's taxation rate is 35 per cent. Assume that book profit or loss from the sale of the asset is taxable at corporate tax rate. Should the company replace the old machine? Show calculations on incremental cash flow basis. How would your decision be affected if another new machine is available at a cost of 1,75,000 with a salvage value of 25,000. The machine is expected…
onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.
A firm is considering replacing a machinethat has been used to make a certain kind of packaging material. The new, improved machine willcost $31,000 installed and will have an estimatedeconomic life of 10 years with a salvage value of$2,500. Operating costs are expected to be $1,000per year throughout the service life of the machine.The old machine (still in use) had an original cost of$25,000 four years ago, and at the time it was purchased, its service life (physical life) was estimatedto be seven years with a salvage value of $5,000. Theold machine has a current market value of $7,700. Ifthe firm retains the old machine, its updated marketvalues and operating costs for the next four years willbe as given in Table P14.8.The firm’s MARR is 12%.(a) Working with the updated estimates of marketvalues and operating costs over the next fouryears, determine the remaining useful life of theold machine.(b) Determine whether it is economical to make thereplacement now.(c) If the firm’s…
Plz show excel formula !!!! Benson Enterprises is deciding when to replace its old machine. The machine’s current salvagevalue is $1.2 million. Its current book value is $1 million. If not sold, the old machine will requiremaintenance costs of $420,000 at the end of the year for the next five years. Depreciation on theold machine is $200,000 per year. At the end of five years, it will have a salvage value of $220,000.A replacement machine costs $3.5 million now and requires maintenance costs of $160,000 at theend of each year during its economic life of five years. At the end of five years, the new machinewill have a salvage value of $540,000. It will be fully depreciated using the three-year MACRSschedule. In five years a replacement machine will cost $4,000,000. Pilot will need to purchasethis machine regardless of what choice it makes today. The corporate tax is 35 percent and theappropriate discount rate is 10 percent. The company is assumed to earn sufficient revenues togenerate…