19, the Sackville Furniture Company bought a new band saw for $380,000. Aside from depreciation expenses, its yearly expenses totalled $1,100,000 versus $1,700,000 in income. How much tax (at 40 percent) would the company have paid in 2019 if it had been permitted to use each of the following depreciation schemes? a. Straight-line, with a life of 10 years and a zero salvage value b. Straight-line, with a life of five years and a zero salvage value c. Declining-balance, at 20 percent d. Declining-balance, at 50 percent e. Fully expensed that year

19, the Sackville Furniture Company bought a new band saw for $380,000. Aside from depreciation expenses, its yearly expenses totalled $1,100,000 versus $1,700,000 in income. How much tax (at 40 percent) would the company have paid in 2019 if it had been permitted to use each of the following depreciation schemes? a. Straight-line, with a life of 10 years and a zero salvage value b. Straight-line, with a life of five years and a zero salvage value c. Declining-balance, at 20 percent d. Declining-balance, at 50 percent e. Fully expensed that year

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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Schager Company purchased a computer system on January 1, 2019, at a cash cost of $25,000. The estimated useful life is 10 years, and the estimated residual value is $3,000. The company will use the double declining-balance depreciation method. How much is the 2020 depreciation expense? Group of answer choices A)$5,000 B)$4,120 C)$4,000 D)$3,520 E)None of the above
Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $4,800. The cost of the building was $96,000. The current book value of the equipment (January 1, 2021) is $81,600. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2021, the company decided to reduce the original useful life by 25% and to establish a salvage value of $4,800. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects. 1. Prepare the journal entry, if any, to report the accounting change under GAAP. 2. Record the annual depreciation for 2021.
[The following information applies to the questions displayed below.] NewTech purchases computer equipment for $267,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $25,000. Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation. Straight-Line Depreciation Annual Depreciation Expense Choose Numerator: Choose Denominator: Cost minus salvage IEstimated useful life (years) Depreciation expense %3D $ 242,000 / 4 = $ 60,500 Year Annual Depreciation Year-End Book Value Year 1 $ 60,500 $ 206,500 Year 2 60,500 146,000 Year 3 60,500 85,500 Year 4 60,500 25,000 Total 242,000 II %24
Popeye Company purchased a machine for $350,000 on January 1, 2020. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2020. Popeye discovered the error in 2021. What amount should Popeye record as depreciation expense for 2021? The tax rate is 25%. O O O O $105,000. $52,500. $70,000. $140,000.
On May 22, 2020, Colossal Corporation purchased machinery for $80,000. The useful life of this machinery is estimated at 10 years, with a $10,000 residual value. (i). Assume that Colossal uses straight-line depreciation and the half-year convention. Depreciation expense on this machinery will be: Select one: O a. $4,000 in 2020 and $8,000 in 2021 O b. $3,500 in 2020 and $7,000 in 2021 O c. $8,000 in 2020 and $8,000 in 2021 d. $7,000 in 2020 and $7,000 in 2021
16. $ drove the truck 125,000 and 134,000 miles, respectively, to deliver merchandise to its customers. The company During the first two years, SN, Inc., originally purchased the truck for $140,000. If the truck has an estimated life of 5 years or 500,000 miles, with an estimated residual value of $50,000, what amount of depreciation expense should SN record in the second year using the activity-based method? JM Corporation purchased equipment at the beginning of 2015 for $475,000. In 2015, 2016 and 2017, JM depreciated the asset on a straight-line basis with an estimated useful life of 10 years and a $75,000 residual value. What is the BOOK VALUE of the equipment at the beginning of 2018? 17. $ 18. $ AD Enterprises purchased equipment for $400,000 on January 1, year 1. The equipment is expected to have a 10-year life, with a residual value of $30,000 at the end of its service life. Using the double-declining balance method, determine depreciation expense for year 2. 19. $ AD…
Please help me with this question: Holmes Packaging sold a machine for $49,500. The company bought this machine for $120,000 seven years ago and was depreciating it on a straight-line basis over ten years to a $12,000 salvage value. What is the gain (loss) that Holmes Packaging should report?
Freedom Corporation acquired a fixed asset for $140,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 6% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C, TABLE 2.) Required: 1. What is the incremental present value of the tax benefits resulting from calculating depreciation using the sum-of-the-years'-digits (SYD) method rather than the straight-line (SLN) method on this asset? Use the SYD and SLN functions in Excel to calculate depreciation charges. 2. What is the incremental present value of the tax benefits resulting from calculating depreciation using the double-declining-balance (DDB) method rather than the straight-line (SLN) method on this asset? Use the SLN and DDB functions in Excel to calculate depreciation charges. 3. What is the incremental present value of the tax benefits resulting from using MACRS rather than straight-line (SLN) depreciation? The asset qualifies as a…
The double-declining-balance method is to be used for an asset with a cost of $90.000. estimated salvage value of $ 12.000. and estimated useful life of five years.(a) What is the depreciation for the first three tax years, assuming that the asset was placed in service at the beginning of the year?(b) If switching to the straight-line method is allowed, when is the optimal time to switch?
[The following information applies to the questions displayed below.] NewTech purchases computer equipment for $267,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $25,000. Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation. Straight-Line Depreciation Annual Depreciation Expense Choose Numerator: Choose Denominator: Depreciation expense %3D Year Annual Depreciation Year-End Book Value Year 1 Year 2 Year 3 Year 4 Total II %24
N6 A new machine tool is being purchased for $260,000 and is expected to have a $36,000 salvage value at the end of its 5-year useful life. Assume any remaining depreciation is claimed in the last year. Compute the depreciation schedules for this capital asset, using the following methods: (a) Straight-line depreciation (b) MACRS Note: No statement is required for this problem.
Power Manufacturing has equipment that it purchased 6 years ago for $2,900,000. The equipment was used for a project that was intended to last for 8 years. However, due to low demand, the project is being shut down. The equipment was depreciated using the straight-line method and can be sold for $470,000 today. The company's tax rate is 21 percent. What is the aftertax salvage value of the equipment? Multiple Choice $513,350 $383,300