Hint: Use the reducing balance equation An enterprise provides each of itsdirectors with a car. The companypurchases these at £40,000 each. After 4years of use it replaces each vehicle andsells the old vehicles. It does this throughan auction whilst placing a reserve price of50% below the original cost.Using the reducing balance method ofdepreciation determine the annual changein value for each of the four years that thevehicle is owned. Once you have donethat, answer the following:What is the annual rate of depreciation?22%16%5%12%

The reducing balance method is also know as declining balance method where rate of depreciation is…

Answered: An enterprise provides each of its…

An enterprise provides each of its directors with a car. The company purchases these at £40,000 each. After 4 years of use it replaces each vehicle and sells the old vehicles. It does this through

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 8PA: Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the...

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A company provides each of its directors with a car. It has purchased these at £35,000 each. After 4 years of use it replaces each vehicle and sells the used ones. It does this through an auction placing a reserve value of 40% below the original purchase cost. Using the sum-of-the-digits method determine the total depreciation for years 1 and 2 together £4200 £7000 £9800 O £8800 D View hint for Question 3 DELL
A company buys a £300 computer in Year 1 and capitalizes the expenditure. Th e computer has a useful life of three years and an expected salvage value of £0, so the annualdepreciation expense using the straight-line method is £100 per year. Compared to expensing the entire £300 immediately, the company’s pretax profit in Year1 is £200 greater.1. Assume that the company continues to buy an identical computer each year at thesame price. If the company uses the same accounting treatment for each of the computers, when does the profit-enhancing eff ect of capitalizing versus expensing end?2. If the company buys another identical computer in Year 4, using the same accounting treatment as the prior years, what is the eff ect on Year 4 profits of capitalizingversus expensing these expenditures?
A company provides each of its directors with a car. It has purchased these at £35,000 each. After 4 years of use it replaces each vehicle and sells the used ones. It does this through an auction placing a reserve value of 40% below the original purchase cost. Determine the annual rate of depreciation. 20.5% 10% 15% O 12% DView hint for Question 12 Acti Next Page Page 12 of 20 Previous Page 36°C 2020
Bruno buys two motor vans costing RM41,000 in total. They are depreciated on the reducing-balance basis at the rate of 40% per annum. Which of the following statements is true? A. The NBV of the vans after two years will be RM14,760 and the depreciation charge for year 2 will be RM9,840 B. The NBV of the vans after one year will be RM14,760 and the depreciation charge for year 2 will be RM16,400. C. The NBV of the vans after two years will be RM24,600 and the depreciation charge for year 2 will be RM9,840 D. The NBV of the vans after one year will be RM24,600 and the depreciation charge for year 2 will be RM16,400.
Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.
Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?
Mwasalat Company wants to renovate one of its existing buses at cost of OMR 200,000 and the Company will incur a repair cost of OMR 20,000 at the end of 3rd year from now. If these costs are incurred, the bus will be useful for 6 years. After a 6-year period, it will be sold at a salvage value of OMR 30,000. The total annual revenues of the bus will be OMR 260,000 and the total cost to operate the bus will be OMR 170,000 per year. Alternatively, Mwasalat Company can purchase a new bus for OMR 190,000. The new bus will require some repairs at the end of the 6-year period at a cost of OMR15,000. Its salvage value will be OMR 40,000 after its useful life of 6 years. The total annual revenues of the new bus will be OMR 220,000 and its operating cost will be OMR 130,000 per year. The company’s required rate of return is 15% before taxes. A)Should Mwasalat Company renovate the old bus or purchase a new bus? Justify your answer. B)Would the above decision of Mwasalat Company will change if…
A certain machinery costs P 50,000 lasts 12 years with a salvage value of P 5,000. If the owner decides to sell it after using for 5 years, what should be his price be so that he will not lose or gain financially in the transactions? Use double declining balance method for depreciation.
An old automobile is traded for a new automobile with a list price of $30,000. The old automobile has a net book value of $5,000, but the dealer has given $6,000 trade-in allowance, so the total purchase price is $24,000. The automobile will be depreciated according to the five-year MACRS class. Determine the cost basis to use and compute the MACRS percentages and the depreciation amounts for the new automobile.
A contractor can buy dump trucks for ₱ 800,000 each or rent them for ₱ 1,200 per truck per day. The truck has a salvage value of ₱ 100,000 at the end of its useful life of 5 years. The annual cost of maintenance is ₱ 20,000. Using annual cost method and 14% interest rate, determine the number of days per year that a truck must be used to warrant its purchased. Use sinking fund method of depreciation.
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PS Builders Co purchases a new excavator costing £48,000. Its expected useful life is ten years, at which point it is anticipated that the excavator will have a residual value of £9450. If the reducing-balance method of depreciation is used, applying an annual depreciation rate of 15%, what is the annual depreciation charge in Year 2? O A. £4,000 B. £6,120 O C. £4,400 O D. £5,610