A machine shop purchased 12 years ago an Arc Welding Machine for Php 73,000.00. A straight-line depreciation reserve had been provided on an 18 years life of the machine. The owner of the machine shop desires to replace the old Ard welding Machine with a modern unit of many advantages costing Php. 120,000.00 It can sell the old unit for Php. 30,000. How much new capital will be required for the

A machine shop purchased 12 years ago an Arc Welding Machine for Php 73,000.00. A straight-line depreciation reserve had been provided on an 18 years life of the machine. The owner of the machine shop desires to replace the old Ard welding Machine with a modern unit of many advantages costing Php. 120,000.00 It can sell the old unit for Php. 30,000. How much new capital will be required for the

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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Topic: Depreciation Solve with detailed written solution.
ECONOMICS UPVOTE WILL BE GIVEN. PLEASE CHOOSE THE CORRECT ANSWER. NO LONG EXPLANATION NEEDED. A manufacturer purchased and installed a production machine 6 years ago at a cost of Php 2,000,000. Since then the machine has been depreciated for tax purposes to a value of Php 350,000 and it now requires replacement. A new machine will be purchased for Php 3,000,000 and the old machine sold to a used equipment dealer for Php 500,000. Which of the four peso values above is a book cost, not an actual cash transaction? A. Php 2,000,000 B. Php 350,000 C. Php 3,000,000 D. Php 500,000
A huge utility company paid P100,000 for five secondhand trucks from a smaller utility company. The automobiles were purchased for P300,000 ten years ago. The vehicles' annual maintenance expenditures are expected to be P1,500 per year, with each vehicle having a salvage value of P5,000 after four years. Which of the following would the huge utility contractor's economic analysis exclude?
(4). Gifted Heart Construction Company obtained a loan from Bay Area Bank at an interest rate of 10% to purchase an excavator for $550,000. The tires will be replaced at a cost of $80,000 and the engine would be refurbished at a cost of $50,000 in year 5. The salvage value of the excavator after 10 years of use in construction projects would be $75,000. (a). What is the annual cost of owning the excavator? (b). What is the future cost 6 years from now? IF
Pads Corp. is contemplating the purchase of a large stamping machine which will cost Php 500,000. With additional transportation and installation costs of Php 40,000 and 65,000. Its market value the end of 5 years is estimated at Php 75,000. What is the accumulated depreciation at the end of year 4 using, (a) declining balance method? (b) sum of the years method? (c) sinking fund method (9%)? Round off your answers to the nearest 2 decimal places.
-An engineer purchased 12years ago a heavy planner for P50,000.00 As the life of planner was 20years, a straight-line depreciation reserve has been provided on that basis. Now the firm wishes to replace the old planner with a newly designed planner possessing several advantages. It can sell old planner for P10,000.00. The new machine will cost P70,000.00. How much new capital will be required to make the purchase?
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The Bruin's Den Outdoor Gear is considering a new 7-year project to produce a new tent line. The equipment necessary would cost $1.95 million and be depreciated usi$882,038 $991,492 $854,426 $750,550 $1,103,426ng straight-line depreciation to a book value of zero. At the end of the project, the equipment can be sold for 15 percent of its initial cost. The company believes that it can sell 30,500 tents per year at a price of $78 and variable costs of $37 per tent. The fixed costs will be $535,000 per year. The project will require an initial investment in net working capital of $249,000 that will be recovered at the end of the project. The required rate of return is 12.1 percent and the tax rate is 21 percent. What is the NPV? A. $882,038 B. $991,492 C. $854,426 D. $750,550 E. $1,103,426
The cost of a new machine is $40,000 and the new machine takes $2,000 to install. At the end of its useful life, its salvage value is $5,000. Under the modified accelerated cost recovery system (MACRS), what is the depreciable value of the new machine? a $35,000 b $37,000 c $42,000 d $40,000
1. Johnson Products is considering purchasing a new milling machine that costs $100,000. The machine's installation and shipping costs will total $2,500. If accepted, the milling machine project will require an initial net working capital investment of $20,000. Johnson plans to depreciate the machine on a straight-line basis over a period of 8 years about a year ago, Johnson paid $10,000 to a consulting firm to conduct a feasibility study of the new milling machine. Johnson's marginal tax rate is 40 percent. a. Calculate the project's net investment (NINV) b. Calculate the annual straight-line depreciation for the project.
Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B Cost of equipment required $ 100,000 $ 0 Working capital investment required $ 0 $ 100,000 Annual cash inflows $ 21,000 $ 16,000 Salvage value of equipment in six years $ 8,000 $ 0 Life of the project 6 years 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 14%. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.) 2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.) 3. Which investment…