DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $135,000. The firm has a chance to sell its 5-year-old roaster for $34,000. The existing roaster originally cost $60,500and was being depreciated using MACRS and a 7-year recovery period (see the table attached below.)DuPree is subject to a 21% tax rate.a. What is the book value of the existing roaster?b. Calculate the after-tax proceeds of the sale of the existing roaster.c. Calculate the change in net working capital using the following figures: Anticipated Changes in Current Assets and Current LiabilitiesAccruals−$19,500Inventory+50,000Accounts payable+40,900Accounts receivable+70,200Cash0Notes payable+14,400 Data table(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.)Rounded Depreciation Percentages by Recovery Year Using MACRS forFirst Four Property ClassesPercentage by recovery year*5 yearsRecovery year3 years7 years10 years133%20%14%10%45%32%25%18%315%19%18%14%47%12%12%12%12%9%9%6.5%9%8%79%7%4%6%9.6%106%114%Totals100%100%100%100%*These percentages have been rounded to the nearest whole percent to simplify calculations whileretaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actualunrounded percentages or directly apply double-declining balance (200%) depreciation using the half-yearconvention.eck answexaPrintDone57W

Calculation of depreciation as per MACRS table Year Depreciation 1 14% 2 25% 3 18% 4…

Answered: DuPree Coffee Roasters, Inc., wishes…

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets

Section19.5: Declining-balance Method Of Depreciation

Problem 1OYO

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DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $135,000. The firm has a chance to sell its 5-year-old roaster for $34,000. The existing roaster originally cost $60,500
and was being depreciated using MACRS and a 7-year recovery period (see the table attached below.)

DuPree is subject to a 21% tax rate.

a. What is the book value of the existing roaster?

b. Calculate the after-tax proceeds of the sale of the existing roaster.

c. Calculate the change in net working capital using the following figures:

Anticipated Changes in Current Assets and Current Liabilities
Accruals	−$19,500
Inventory	+50,000
Accounts payable	+40,900
Accounts receivable	+70,200
Cash	0
Notes payable	+14,400

Data table
(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.)
Rounded Depreciation Percentages by Recovery Year Using MACRS for
First Four Property Classes
Percentage by recovery year*
5 years
Recovery year
3 years
7 years
10 years
1
33%
20%
14%
10%
45%
32%
25%
18%
3
15%
19%
18%
14%
4
7%
12%
12%
12%
12%
9%
9%
6.
5%
9%
8%
7
9%
7%
4%
6%
9.
6%
10
6%
11
4%
Totals
100%
100%
100%
100%
*These percentages have been rounded to the nearest whole percent to simplify calculations while
retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual
unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year
convention.
eck answ
exa
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