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?

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?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 1P

See similar textbooks

Related questions

Q: A new CNC machine has an installed with a cost basis of $35,000 and an estimated service life of…

A: Given: Cost of asset = $35,000 Life = 7 years

Q: Sandhill Inc. wants to purchase a new machine for $37,840, excluding $1,300 of installation costs.…

A: Before investing in new projects or assets, profitability of the project is evaluated by using…

Q: ose estimated salvage value is zero. Expected before-tax cash savings from the new machine are…

A: Operating cash flow is that amount which is earned by the entity from operating activity of the…

Q: What is the sunk cost if the depreciation method is a straight-line method?

A: Sunk cost costs are those costs or expenses that already been spent and cannot be recovered.…

Q: Daily Enterprises is purchasing a $10.5 million machine. It will cost $55,000 to transport and…

A: The Straight-Line Method (SLM) of depreciation is a typical accounting method for allocating an…

Q: A machine now in use, which was bought five years ago for $4,000, has been fully depreciated. It can…

A: Opportunity cost: The opportunity cost is the benefit that has been lost due to the selection of…

Q: A dump truck was bought for P30,000 six years ago. It will have a salvage value of 3,000 four years…

A: Depreciation is the reduction in the value of asset because of its use & obsolescence.…

Q: Bonita Industries is contemplating the replacement of an old machine with a new one. The following…

A: This question is related to capital budgeting in financial management, in which we have to calculate…

Q: The Sumitomo Chemical Corporation is considering replacing a 5-year-old machine that originally cost…

A: Replacement cost of the new machine = $125,000Sale proceeds of old machine = $60,000Life = 5…

Q: Five years ago, a piece of equipment was purchased at a cost of $170,000, with a salvage value of…

A: Net present value is a technique to evaluate different investment proposals and select the best one.…

Q: A machine purchased three years ago for $311,000 has a current book value using straight-line…

A: Machinery costs can be classified into two domains Annual ownership costs Operating Costs Annual…

Q: Benson Enterprises is deciding when to replace its old machine. The machine’s current salvage value…

A: The question is based on the concept of project valuation.

Q: Sheridan Inc. wants to purchase a new machine for $44,300, excluding $1,500 of installation costs.…

A: Here, Cost of new machine = $44,300 Installation costs = $1,500 Salvage value of old machine = 2,200…

Q: Crane Inc. wants to purchase a new machine for $40,700, excluding $1,500 of installation costs. The…

A: The objective of the question is to evaluate the financial feasibility of purchasing a new machine…

Q: Daily Enterprises is purchasing a $10.0 million machine. It will cost $50,000 to transport and…

A: An asset's salvage value is determined by what a business anticipates getting in return for…

Q: A new barcode reading device has an installed cost basis of $20,670and an estimated service life of…

A: Double declining balance method is a method which is used to determine the value of depreciation…

Q: What will the depreciation charge be in year seven? What will be the book value at the end of year…

A: Formula: Rate of DDB Depreciation= 100%Usefull Life×2 Given: CNC machine $35,000 Service life 7…

Q: Anew barcode reading device has an installed cost basis of $21,700 and an estimated service life of…

A: Introduction: Depreciation: Decreasing value of fixed assets over its useful life period called as…

Q: An automated assembly robot that cost $300,000 has a recovery period of five years with an expected…

A: Depreciation recapture- It is a tax provision that powers the IRS to collect taxes on any profitable…

Q: Daily Enterprises is purchasing a $9.6 million machine. It will cost $46,000 to transport and…

A: Given: Cost of asset = $9,600,000 Cost of installation = $46,000 Life = 5 years

Q: A machine purchased three years ago for $309,000 has a current book value using straight-line…

A: First of all, the cost of old machinery is sunk cost and no more relevant for our calculations. The…

Q: eorgia Energy is contemplating replacing an oil-powered generator with a solar powered generator.…

A: Answer As explained below Project NPV is 3.98mn $. Also, as this NPV is greater than the cash from…

Q: A machine purchased three years ago for $318,000 has a current book value using straight-line…

A: Machinery costs can be classified into two domainsAnnual ownership costsOperating CostsAnnual Costs…

Q: Super Mega Business Corporation (SMBC) is purchasing a $20 million machine. It will cost $50,000 to…

A: The gradual, continuous, and permanent decrease in the book value of the asset is known as…

Q: A new piece of equipment, with a life of eight years, costs $12000 to purchase. The end of life…

A: A part of the cost of the asset is charged as depreciation expense every year. When depreciation…

Q: BSU Inc. wants to purchase a new machine for $29,300, excluding $1,500 of installation costs. The…

A: It is a tool to estimate the profitability of an investment. It is the discount rate, at which the…

Q: Benson Enterprises is deciding when to replace its old machine. The machine’s current salvage value…

A: Given: Benson Enterprises is deciding when to replace its old machine. In five years a replacement…

Q: A new barcode reading device has an installed cost basis of $22,820 and an estimated service life of…

A: In the case of 150% declining balance method, depreciation is calculated as follows - Depreciation…

Q: A new barcode reading device has an installed cost basis of $24,750 and an estimated service life of…

A: Depreciation refers to the decrease in the value of an asset over time due to various factors such…

Q: ASAP. THANK YOU! A. A machine costs P388868 with a salvage value of P18029 is expected to last for…

A: Depreciation :— It is the allocation of depreciable cost over the expected life of asset.…

Q: A new barcode reading device has an installed cost basis of $22,820 and an estimated service life of…

A: Hi student Since there are multiple subparts, we will answer only first three subparts. Depreciation…

Question

A machine now in use was purchased four
years ago at a cost of $30,000. It has a book value
of $9,369. It can be sold for $12,000, but it could be
used for three more years, at the end of which time,
it would have no salvage value. What is the current
amount of economic depreciation for this asset?

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Depreciation

VIEW

Answer

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A dump truck was bought for P30,000 six years ago. It will have a salvage value of 3,000 four years from now. It is sold now for P8000. What is its sunk cost (a cost that can't be recovered due to certain reason) if the depreciation method used is the sinking fund method at 6 %?
A machine purchased three years ago for $318,000 has a current book value using straight-line depreciation of $192,000; its operating expenses are $39,000 per year. A replacement machine would cost $227,000, have a useful life of nine years, and would require $10,000 per year in operating expenses. It has an expected salvage value of $71,000 after nine years. The current disposal value of the old machine is $81,000; if it is kept 9 more years, its residual value would be $18,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Total costs Should the old machine be replaced? Purchase New Machine
Having an issue with this problem.
An automated assembly robot that cost $300,000 has a recovery period of five years with an expected $50,000 salvage value. If the MACRS depreciation rates for years 1, 2, and 3 are 20.0%, 32.0%, and 19.2%, respectively, what is the depreciation recapture, capital gain, or capital loss, provided the robot was sold after 3 years for $80,000?
← Daily Enterprises is purchasing a $10.5 million machine. It will cost $55,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. If Daily uses straight-line depreciation, what are the depreciation expenses associated with this machine? The yearly depreciation expenses are $. (Round to the nearest dollar.)
Having an issue with this problem. Thank you
A chemical mixer was purchased 8 years ago for $100,000. If retained, it will require an investment of $50,000 to upgrade it; if upgraded, it will cost $35,000/year to operate and maintain (O&M) and will have a negligible salvage value after 5 years. A new mixer can be purchased for $120,000; it will have an annual O&M cost of $15,000 and a salvage value of $40,000 after 5 years. Alternatively, a mixer can be leased with 5 beginning-of-year lease payments of $20,000; O&M costs will be $18,000/year. If the mixer is replaced, the old mixer can be sold on the used equipment market for $15,000. Using an insider’s approach, what are (a) the EUAC of keeping the current mixer, (b) the EUAC of replacing with a new mixer, and (c) the EUAC of replacing with a leased mixer? The MARR is 10%.
Please help me
The great tech company is considering replacing one of its machines with a more efficient one. The old machine has a book value of $60,000 and a remaining useful life of 5 years. It can sell the old machine now for $ 265,000. The old machine is being depreciated by 120,000 per year straight line. The new machine has a purchase price of $ 1,175,000 an estimated useful life and 5 years MACRS class life and salvage value of $145,000. Annual economic savings is $255,000 if new machine is installed. Taxes 35% and WACC is 12. Calculate the NPV and IRR of the project and make a decision on accepting the project and why? If expected life of existing machine decreased what effect does this have on the cash flow, discuss only? No calculations needed, just discuss.
A new press brake costs Concordia Holdings $820000. It is expected to last 13 years, with a $58000 salvage value. What rate of depreciation using the declining-balance method will produce a book value that equals the salvage value of the press after 13 years? O 18.43% O 23.43% O 25.93% O 28.43% O None of the given answers
2
Your facility is undergoing a major expansion, which will require significant capitalinvestment into new machinery. The total cost of the machinery will be $7.2 Million, and theywill be purchased outright immediately. This machinery is considered a 7-year MACRSasset. However, you expect to use it for only six years before selling it for $1.5 Million. What is the unrecovered MACRS depreciation (i.e. remaining book value) of this machineryat the time of sale at the end of year 6?a. $5,914,800b. $964,080c. $1,017,450d. $1,285,200