COLLEGE ACCOUNTING (LL)W/ACCESS>CUSTOM<
4th Edition
ISBN: 9781260255157
Author: Haddock
Publisher: MCG CUSTOM
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Chapter 5, Problem 1.6SRA
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Determine the book value of the truck at end of three years.
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An automated assembly robot that cost $400,000 has a depreciable life of five years with a $100,000 salvage value. If the MACRS depreciation rates for years 1, 2, and 3 are 20.00, 32.00, and 19.20%, respectively, what is the book valueof the robot at the end of year three?
A machine now in use was purchased fouryears ago at a cost of $30,000. It has a book valueof $9,369. It can be sold for $12,000, but it could beused for three more years, at the end of which time,it would have no salvage value. What is the currentamount of economic depreciation for this asset?
The Darlington Equipment Company purchased a machine5 years ago at a cost of $85,000. The machine had an expected life of 10 years at thetime of purchase, and it is being depreciated by the straight-line method by $8,500per year. If the machine is not replaced, it can be sold for $15,000 at the end of itsuseful life.A new machine can be purchased for $170,000, including installation costs. Duringits 5-year life, it will reduce cash operating expenses by $40,000 per year. Sales are notexpected to change. At the end of its useful life, the machine is estimated to be worthless.MACRS depreciation will be used, and the machine will be depreciated over its 3-year classlife rather than its 5-year economic life, so the applicable depreciation rates are 33%, 45%,15%, and 7%.The old machine can be sold today for $55,000. The firm’s tax rate is 40%. The appropriateWACC is 9%.a. If the new machine is purchased, what is the amount of the initial cash flow atYear 0?b. What are the incremental cash…
Chapter 5 Solutions
COLLEGE ACCOUNTING (LL)W/ACCESS>CUSTOM<
Ch. 5 - What are adjustments?Ch. 5 - Prob. 1.2SRQCh. 5 - Prob. 1.3SRQCh. 5 - Prob. 1.4SRECh. 5 - Prob. 1.5SRECh. 5 - Prob. 1.6SRACh. 5 - Prob. 2.1SRQCh. 5 - Prob. 2.2SRQCh. 5 - Prob. 2.3SRQCh. 5 - Prob. 2.4SRE
Ch. 5 - On a worksheet, the adjusted balance of the...Ch. 5 - Prob. 2.6SRACh. 5 - Prob. 1CSRCh. 5 - Prob. 2CSRCh. 5 - Prob. 3CSRCh. 5 - Prob. 4CSRCh. 5 - The Supplies account has a debit balance of 9,000...Ch. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Prob. 8DQCh. 5 - What effect does each item in Question 8 have on...Ch. 5 - Why is it necessary to journalize and post...Ch. 5 - Prob. 11DQCh. 5 - Prob. 12DQCh. 5 - How does a contra asset account differ from a...Ch. 5 - Prob. 14DQCh. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Prob. 3ECh. 5 - Prob. 4ECh. 5 - Journalizing and posting adjustments. Desoto...Ch. 5 - Prob. 1PACh. 5 - Prob. 2PACh. 5 - Prob. 3PACh. 5 - Prob. 4PACh. 5 - Prob. 1PBCh. 5 - Prob. 2PBCh. 5 - Prob. 3PBCh. 5 - Sam Nix owns Nix Estate Planning and Investments....Ch. 5 - The Effect of Adjustments Assume you are the...Ch. 5 - The account balances for the Patterson...Ch. 5 - Prob. 1MFCh. 5 - Prob. 2MFCh. 5 - Prob. 3MFCh. 5 - Prob. 4MFCh. 5 - Prob. 1ED
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- 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 $50,000. The firm's tax rate is 25%. The appropriate WACC is 9%. If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation is considered? Cash outflow should be indicated by a minus sign. Round your answer to the nearest dollar.$…arrow_forwardA machine now in use was purchased fouryears ago at a cost of $30,000. It has a book valueof $9,369. It can be sold for $12,000, but it could beused for three more years, at the end of which time,it would have no salvage value. What is the currentamount of economic depreciation for this asset?9.2 You sold an automobile at a price of $14,000.The automobile was purchased three years ago for$20,000. The car had been depreciated accordingto a five-year MACRS property class, and the bookvalue was $5,760. What is the amount of economicdepreciation?arrow_forwardThe Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $95,000. 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 $9,500 per year. If the machine is not replaced, it can be sold for $10,000 at the end of its useful life. A new machine can be purchased for $180,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $40,000 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%. a. 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…arrow_forward
- The Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $95,000. 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 $9,500 per year. If the machine is not replaced, it can be sold for $10,000 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 $55,000 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 $60,000. The firm's tax rate is 25%. The appropriate WACC is 9%. a. 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…arrow_forwardMontezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.arrow_forwardThe Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $80,000. 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 $8,000 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 $160,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $40,000 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%. a. 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…arrow_forward
- A new barcode reading device has an installed cost basis of $22,330 and an estimated service life of nine years. It will have a zero salvage value at that time. The 200% declining balance method is used to depreciate this asset. A)What is the book value at the end of year eight? A)The book value at the end of year eight is $enter your response here. (Round to the nearest dollar.)arrow_forwardA 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. a. What will the depreciation charge be in year seven? b. 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?arrow_forwardA new barcode reading device has an installed cost basis of $21,700 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 a. What will the depreciation charge be in year seven? b What is the book value at the end of year six? c What is the gain (or loss) on the disposal of the device if it is sold for $3,000 after six years? a. The depreciation charge in year seven will be (Round to the nearest dollar.) b The book value at the end of year six is $ (Round to the nearest dollar.) c The on the disposal of the device if it is sold for $3,000 after six years is $1. (Round to the nearest dollar.) gain lossarrow_forward
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