The company expects machine X to last five years and to have a residual value of $4,600 when it is removed from service, and itexpects machine Y to be useful for eight more years and have a residual value of $14,990 at that time. Due to the differentcharacteristics of the two machines, different depreciation methods will be used for them: machine X will be depreciated using thedouble-diminishing-balance method and machine Y using the straight-line method.Prepare the journal entry to record the purchase of the machines, indicating the initial cost of each. (Credit account titles areautomatically indented when the amount is entered. Do not indent manually. Round percentage to 1 decimal place, for e.g. 40.1 and Roundanswers to the nearest whole dollar, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

Approach to solving the question: Let's assume the initial costs are as follows:Machine X initial…

Answered: The company expects machine X to last…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which method of depreciation, from parts 1-3, would result in the largest net income in the first year for Watkins Production? Explain your reasoning? Which method of depreciation, from part 1-3, would results in the largest net income over the entire 5 years? Explain your reasoning ?
Delaney Company is considering replacing equipment that originally cost $532,000 and has accumulated depreciation of $372,400 to date. A new machine will cost $891,000. what is the the sunk cost in this situation?
A new CNC machine has an installed with a cost basis of $35,000 and an estimated service life of seven years. It will have a zero-salvage value at that time. The 200% declining balance method is used to depreciate this asset. What will the depreciation charge be in year seven? What will be the book value at the end of year six? c. What will be the gain (or loss) on the disposal of the asset if it is sold for $1,200 after six years?
I cant compute the math correctly for this. I know you have to determine the double-declining balance rate and then the double-declining depreciation but every answer I input it says its wrong
I have the answer and question below but I just needf to know how to work it out Solve the problem. Round unit depreciation to nearest cent when making the schedule, and round final results to the nearest cent. A construction company purchased a piece of equipment for $1,710. The expected life is 7,000 hours, after which it will have a salvage value of $280. Find the amount of depreciation for the first year if the piece of equipment was used for 1,600 hours. Use the units-of-production method of depreciation. Answer: ($320)
An automated assembly robot that cost $352,000 has a depreciable life of 5 years with a $85,000 salvage value. The MACRS (Modified Accelerated Cost Recovery System) depreciation rates for years 1, 2, 3, and 6 are 20.00%, 32.00%, 19.20%, and 5.76%, respectively. What is the book value at the end of year 3? Year 5? Year 6? The book value at the end of year 3 is $ . The book value at the end of year 5 is $ . The book value at the end of year 6 is $ .
The Darlington Equipment Company purchased a machine 5 years ago at a cost of $85,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $8,500 per year. If the machine is not replaced, it can be sold for $5,000 at the end of its useful life. A new machine can be purchased for $170,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $45,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% bonus depreciation at the time of purchase. The old machine can be sold today for $50,000. The firm's tax rate is 25%. The appropriate WACC is 9%. If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation is considered? Cash outflow should be indicated by a minus sign. Round your answer to the nearest dollar.$…
ZYK company makes its policy that for every new equipment purchased, the annual depreciation should not exceed 10% of the first cost at any time without salvage value. Determine the length of service if depreciation used is the DDB Method.
An old machine that originally cost $9,500 thus far has accumulated depreciation of$1,900. The remaining useful life is four years, with no salvage value at the end of itsuseful life. A new machine is now available that costs $8,500, with a useful life of fiveyears and no residual value. The old machine could be sold now for $1,400. The annualcash operating costs for the old machine are $5,000, but for the new machine theywould be only $2,500. Gross revenue from the products would be $12,000 annually foreither machine. The company shouldA) keep the old machine to avoid a $6,200 loss on its disposal.B) replace the old machine.C) keep the old machine to avoid an $8,500 decrease in cash.D) keep the old machine to avoid a $1,400 loss on its disposal.
QK company makes it a policy that for any new piece of apparatus, the annual depreciation cost should not exceed 10% of the First Cost while the Salvage Value is 20% of the First Cost. Determine the minimum length of service life in years ( n ), necessary, if the depreciation method used is: Straight line method (SLM) , Declining Balance Method (DMB) and Double Declining Method (DDBM).
Isabel Company has an equipment costing P700,000 with an estimated residual value of P70,000 and an estimated useful life of 6 years. After depreciating the asset for two years using straight-line method of depreciation, the company upgraded the machine parts and the cost of upgrading amounted to P120,000. Assuming the upgrading costs improved the quality of the asset's output, what is the revised depreciation expense for the 3rd year?
ABC company is considering replacing their old manual loading machine with an automatic loading machine. The manual machine cost $300,000 three years ago, and is being depreciated over 10 years straight line depreciation, with no salvage value. If ABC replaces the manual machine, the new automatic machine will cost $400,000 and have a useful life of 10 years. This will also be depreciated on a straight line basis to zero. As a result of this new machine, there will be pretax savings of $130,000 in labour costs and $25,000 in other cash expenses annually. If the automatic machine is purchased, the old machine will immediately be sold at a price of $280,000. The company has already spent $15,000 researching the costs associated with this decision. The company's tax rate is 40% and no inflation is expected. The company's cost of capital is 7%. Calculate the net present value of this decision using a financial calulator

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