A set of office furniture can be purchased and installed for $8,000. It is in the ten-year ADS property class and is expected to be kept inservice for eight years. It is believed that $800 can be obtained when the furniture is disposed of at the end of year eight. The net annualvalue added (i.e., revenues less expenses) that can be attributed to the furniture is constant over eight years and amounts to $3,000. Aneffective income tax rate of 20% is used by the company.a) What is the depreciation in year 8?b) What is the book value (BV8) of the asset in year 8?c) What is the ATCF for this machine in year 8?

Depreciation is the reduction in the value of an asset on account of its…

Answered: a) What is the depreciation in year 8?…

a) What is the depreciation in year 8? b) What is the book value (BV8) of the asset in year 8? c) What is the ATCF for this machine in year 8?

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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Question

A set of office furniture can be purchased and installed for $8,000. It is in the ten-year ADS property class and is expected to be kept in
service for eight years. It is believed that $800 can be obtained when the furniture is disposed of at the end of year eight. The net annual
value added (i.e., revenues less expenses) that can be attributed to the furniture is constant over eight years and amounts to $3,000. An
effective income tax rate of 20% is used by the company.
a) What is the depreciation in year 8?
b) What is the book value (BV8) of the asset in year 8?
c) What is the ATCF for this machine in year 8?

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