A manufacturer of aerospace products purchased three flexible assembly cells for $500,000 each. Delivery and insurance charges were $35,000, and installation of the cells cost another $50,000. a. Determine the cost basis of the three cells. b. What is the class life of the cells? c. What is the MACRS-GDS depreciation in year five? d. If the cells are sold to another company for $120,000 each at the end of year six, what is the BV at that time?

A manufacturer of aerospace products purchased three flexible assembly cells for $500,000 each. Delivery and insurance charges were $35,000, and installation of the cells cost another $50,000. a. Determine the cost basis of the three cells. b. What is the class life of the cells? c. What is the MACRS-GDS depreciation in year five? d. If the cells are sold to another company for $120,000 each at the end of year six, what is the BV at that time?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: MalMax purchased a depreciable asset. What would be the difference in total assets at the end of the…

A: Depreciation is the decrease in value of any asset due to normal wear and tear. Straight line…

Q: A crane rental company has acquired a new heavy-duty crane for $280,000. The company calculates…

A: here we calculate the depreciation rate per rental so the calculation of the following as follow-

Q: True or False: The process used to allocate the cost of intangible assets, such as patents,…

A: It can be defined as a concept that shows the amount of expenditure and any other sacrifice such as…

Q: Your company bought a new machine for $39,000. The machine falls into the 7 - year MACRS category:…

A: MACRS (Modified Accelerated Cost Recovery System): MACRS is a depreciation method used for tax…

Q: What is the expected after-tax cash flow from selling a piece of equipment if TwoPlus purchases the…

A: The expected after-tax cash flow from selling the equipment is $34,778.94 (plus or minus…

Q: A company purchased new mining equipment in year 2018 by paying $400,000 cash. The company plans to…

A: 1. Depreciation for Year Original cost of the equipment: $400,000MACRS-GDS depreciation rate for…

Q: An oil refinery has decided to purchase some new drilling equipment for $570,000. The equipment will…

A: Equipment cost = 570000 Time = 13 years Salvage value = 16000

Q: Del Norte Brick Co. is located near the intersection of Texas, New Mexico, and Mexico. Improved…

A: The cost of the asset is evenly distributed over its useful life through depreciation. Depreciation…

Q: Six years ago, a company purchased $30,000 of equipment. The equipment has just been sold for $5000.…

A: Present Worth is defined as the current value of future cashflows It can be calculated as :…

Q: An automated assembly line is purchased for $1,250,000. The company has decided to use the…

A: The depreciation charge using the unit of production method is calculated by…

Q: Office furniture for a large engineering facility is placed in service at a total cost of $2,100,000…

A: The objective of the question is to determine the Modified Accelerated Cost Recovery System (MACRS)…

Q: An asset purchased for $50,000 has a depreciable life of five years, and it has a terminal book…

A: Depreciation refers to fall/decrease in the value of an asset. There are various methods of…

Q: What would be the value of depreciation if Gross domestic capital formation is $33000 and net…

A: According to the above mentioned question, we have Gross domestic capital formation = $33,000 Net…

Q: Savant Properties in Knoxville, TN built a shopping center at a cost $50M in year 2010. The company…

A: Depreciation is used to allocate the cost of an asset over its useful life for accounting and tax…

Q: A machine purchased for $919866 has a depreciable life of 7 years, and it has a terminal book…

A: The initial cost of the machine (P)= 919866 Life of the machine =7 years Salvage value after 7 years…

Q: Which of the following is (are) required to calculate MACRSGDS depreciation deductions? I. Property…

A: Under MACRS, a Taxpayers must register deducted tax for devaluation of unmistakable property…

Q: How does the tax depreciation method allow the firms to benefit from the tax advantages of…

A: Depreciation is an expense which is deducted from the value of the asset. There are certain tax…

Q: what will be the value of the net domestic product at the factor cost if the gross domestic product…

A: Generally in the given question Value of the gross domestic product at the factor cost is = $7766…

Q: An asset has an expected life of 15 years, but is to be depreciated using a MACRS 7-year property…

A: The cost basis of a property is the original purchase price plus any additional costs associated…

Q: Identify the depreciation method used for Double-declining-balance depreciation?

A: Double declining balance method: it is an accelerated method of depreciation under which the…

Q: Labor costs, materials, all direct and indirect costs, and facilities and productive equipment with…

A: Depreciation is the value of used asset. It is simple giving some cost to a good over its useful…

Q: 41. An equipment costs P100,000.00 and the salvage value is 15% of the origina cost after 25 years.…

A: Since you have posted multiple questions as per the guidelines we can solve only one question per…

Q: An asset with a cost of $100,000 and accumulated depreciation of $80,000 is sold for $8000. What is…

A: Introduction: Gain & Loss: The gain arises from the sale of an asset when the asset is sold at a…

Q: An automated assembly robot that cost $356,000 has a depreciable life of 5 years with a $95,000…

A: When there is MACRS calculation then salvage value will not be considered. The depreciation rate…

Question

A manufacturer of aerospace products purchased three flexible assembly cells for $500,000 each. Delivery
and insurance charges were $35,000, and installation of the cells cost another $50,000.
a. Determine the cost basis of the three cells.
b. What is the class life of the cells?
c. What is the MACRS-GDS depreciation in year five?
d.
If the cells are sold to another company for $120,000 each at the end of year six, what is the BV at
that time?

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

Step 1: Please note:-

VIEW

Step 2: calculation of cost biases

VIEW

Step 3: Calculation of class life of cell

VIEW

Step 4: calculate MARCS GDS DEP

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

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

Similar questions

Material-handling equipment used in the manufacture of grain products (MACRS-GDS 10-year property) is purchased and installed for $180,000. It is placed in service in the middle of the tax year. If it is removed just before the end of the tax year approximately 4.5 years from the date placed in service, determine the depreciation deduction during each of the tax years involved using MACRS-GDS allowances. ———————- Repeat the previous problem if the material-handling equipment is removed just after the tax year, again using MACRS-GDS allowances.
1) Depreciation, a type of expense, is included in the A) research and development B) interest category. C) selling D) general and administrative E) retained
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
What is the expected after-tax cash flow from selling a piece of equipment if Probst purchases the equipment today for $542,980.00, the tax rate is 34.3 percent, the equipment will be sold in 3 years for $103,000.00, and the equipment will be depreciated to $60,600.00 over 12 years using straight-line depreciation? $212,549.05 (plus or minus $10) $240,125.11 (plus or minus $10) $109,035.08 (plus or minus $10) -$41,878.05 (plus or minus $10) None of the above is within $10 of the correct answer
Freeman Engineering paid $40,000 for specialized equipment for use with their new global positioning system/geographic information system (GPS/GIS). The equipment was depreciated over a 3-year recovery period using Modified Accelerated Cost Recovery System (MACRS) depreciation. The company sold the equipment after 2 years for $8,000 when it purchased an upgraded system. Determine the amount of the depreciation recapture or capital loss involved in selling the asset. The amount of capital loss is determined to be $____
A couple of years ago, the company Health4All purchased land, a building, and two depreciable assets from another corporation. All of these have recently been disposed. Use the information shown to determine the presence and amount of any capital gain, capital loss, or depreciation recapture. Asset Land Building Asset 1 Asset 2 Purchase Price, $ -210,000 -800,000 -50,500 -10,000 Recovery Period, Years 27.5 3 3 Current Book Value, $ 320,000 15,500 5,000 Sales Price, $ 265,000 255,000 21,000 11,500 The capital gain (CG) amount for land is determined to be $ The capital loss (CL) amount for building is determined to be $ The depreciation recapture (DR) amount for asset 1 is determined to be $ The depreciation recapture (DR) amount for asset 2 is determined to be $ The capital gain (CG) amount for asset 2 is determined to be $
Calculate depreciation with given information GNP at MP = $100,000 NNP at MP = $77,000