Depreciation Choices and Outcome.Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase:Life of assetSalvage valuePurchase priceSales taxFreight costElectrical set-upCustom programmingEstimated annual labor savingsAdditional revenue generateda. Determine the capitalized cost of the new machine$84600b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming:i. Straight-line depreciationii. Double-declining-balance methodYear 1Year 2Year 3Straight-Line DepreciationDouble-Declining BalanceDepreciation Accumulated Book Value at Depreciation Accumulated Book Value atExpenseDepreciation Year-endExpenseDepreciation Year-End$5 years$9,00054,0003,0002,4002,1001,50010,50024,0000 $00Straight-line $Double-declining $00000$0 $00i. Straight-line depreciationii. Double-declining balance methodDo not use negative signs with your answers below.Amount Gain or Loss◆0 $00000c. Assume the machine is sold for $24,000 at the end of the third year after depreciation has been calculated.Determine the gain or loss assuming:$000d. Given your answer in part c, if Mulligan was able to perfectly predict the future that the machine would be sold for $24,000 at the end of the third year, which depreciation method should Mulligan choose?Ignore taxes.OMulligan's overall cash flow results would be greater if the straight-line method is used.OMulligan's overall cash flow results would be greater if the double-declining method is used.OMulligan's overall cash flow results would be the same with either depreciation methods.Please answer all parts of the question. Depreciation Choices and Outcome.Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase:Life of assetSalvage valuePurchase priceSales taxFreight costElectrical set-upCustom programmingEstimated annual labor savingsAdditional revenue generateda. Determine the capitalized cost of the new machine$84600b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming:i. Straight-line depreciationii. Double-declining-balance methodYear 1Year 2Year 3Straight-Line DepreciationDouble-Declining BalanceDepreciation Accumulated Book Value at Depreciation Accumulated Book Value atExpenseDepreciation Year-endExpenseDepreciation Year-End$5 years$9,00054,0003,0002,4002,1001,50010,50024,0000 $00Straight-line $Double-declining $00000$0 $00i. Straight-line depreciationii. Double-declining balance methodDo not use negative signs with your answers below.Amount Gain or Loss◆0 $00000c. Assume the machine is sold for $24,000 at the end of the third year after depreciation has been calculated.Determine the gain or loss assuming:$000d. Given your answer in part c, if Mulligan was able to perfectly predict the future that the machine would be sold for $24,000 at the end of the third year, which depreciation method should Mulligan choose?Ignore taxes.OMulligan's overall cash flow results would be greater if the straight-line method is used.OMulligan's overall cash flow results would be greater if the double-declining method is used.OMulligan's overall cash flow results would be the same with either depreciation methods.Please answer all parts of the question.

It includes expenses incurred on assets up to making assets ready to use (not put to use). So, that…

Depreciation Choices and Outcome. Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase: Life of asset Salvage value Purchase price Sales tax Freight cost Electrical set-up Custom programming Estimated annual labor savings Additional revenue generated a. Determine the capitalized cost of the new machine $ 84600 b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming: i. Straight-line depreciation ii. Double-declining-balance method Year 1 s Year 2 Year 3 5 years $9,000 54,000 3.000 Straight-Line Depreciation Double-Declining Balance Depreciation Accumulated Book Value at Depreciation Accumulated Book Value at Expense Depreciation Year-end Expense Depreciation Year-End Os 0 2,400 2,100 1,500 10,500 24,000 Straight-line S Double-declining s 05 0 i. Straight-line depreciation ii. Double-declining balance method 0 0 05 0 0 Do not use negative signs with your answers below. Amount Gain or Loss • c. Assume the machine is sold for $24,000 at the end of the third year after depreciation has been calculated. Determine the gain or loss assuming 05 0 05 0 0 0 d. Given your answer in part c, if Mulligan was able to perfectly predict the future that the machine would be sold for $24,000 at the end of the third year, which depreciation method should Mulligan choose? Ignore taxes. OMulligan's overall cash flow results would be greater if the straight-line method is used. OMulligan's overall cash flow results would be greater if the double-declining method is used. OMulligan's overall cash flow results would be the same with either depreciation methods.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 3MCQ: When depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash...

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Depreciation Choices and Outcome. Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase: Life of asset Salvage value Purchase price Sales tax Freight cost Electrical set-up Custom programming Estimated annual labor savings Additional revenue generated a. Determine the capitalized cost of the new machine $84600 b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming: i. Straight-line depreciation ii. Double-declining-balance method Year 1 Year 2 Year 3 Straight-Line Depreciation Double-Declining Balance Depreciation Accumulated Book Value at Depreciation Accumulated Book Value at Expense Depreciation Year-end Expense Depreciation Year-End $ 5 years $9,000 54,000 3,000 2,400 2,100 1,500 10,500 24,000 0 $ 0 0 Straight-line $ Double-declining $ 0 0 0 0 0 $ 0 $ 0 0 i. Straight-line depreciation ii. Double-declining balance method Do not use negative signs with your answers below. Amount Gain or Loss ◆ 0 $ 0 0 0 0 0 c. Assume the machine is sold for $24,000 at the end of the third year after depreciation has been calculated. Determine the gain or loss assuming: $ 0 0 0 d. Given your answer in part c, if Mulligan was able to perfectly predict the future that the machine would be sold for $24,000 at the end of the third year, which depreciation method should Mulligan choose? Ignore taxes. OMulligan's overall cash flow results would be greater if the straight-line method is used. OMulligan's overall cash flow results would be greater if the double-declining method is used. OMulligan's overall cash flow results would be the same with either depreciation methods. Please answer all parts of the question.

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