Please show the steps to answer question a, the correct answer is the "economic life of asset A is 3 years, and the economic life of asset B is 6 year". Ignore part b and c, Thank you The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent of current value eachyear. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows.Initial OperatingRate of OperatingFirst Cost$125,000$125.000AssetCostCost Increase$30,000$30,00013.5%/year13.5%lyearMARR5%25%A.a. Determine the economic lives for assets A and B.b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B.c. Explain the difference in economic life between A and B.Click the icon to view the table of compound interest factors for discrete compounding periods when i= 5%.a. The economic life of asset A isyears, and the economic life of asset B isyears.(Type whole numbers.)

ANSWER(C) The economic life of an asset is the period of time during which it remains useful to its…

Answered: ase show the steps to answer question…

ase show the steps to answer question a, the correct answer is the "economic life of asset A is 3 years, and the economic life of asset B is 6 year". Ignore part b and c, Thank you

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A business will purchase fixed assets to use in the business over a long period of time. The…

A: Depreciation is the decrease in value of an used in the business. Journal entry is a record of…

Q: FDN Company acquires a building on April 1, 2021 at a cost of P26,500,000. The building has an…

A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…

Q: The original cost of a property is $ 35000. Its salvage value is to be $3500 at the end service life…

A: Depreciation means decline in the estimation of benefit inside its valuable life because of mileage…

Q: Give the Given, solution and cash flow diagram A property is acquired for P9,000. its estimated life…

A: Under sum-of the-years digit depreciation method, the depreciation is computed by the following…

Q: An asset that has an estimated physical life of six years and an estimated service life of four…

A: An asset is the resource owned by the entity. This may be non-current asset or current asset.

Q: Noelle placed a rental property in service on February 1, 2022. On June 1, she had a retaining wall…

A: Eliminating the incorrect options:A. 5 years: This recovery period is typically for personal…

Q: A consulting company is buying a new computer system for their headquarters for $175,00 asset has a…

A: Equipment purchased is used due to which value of equipment goes on depreciating and that is to be…

Q: INSTRUCTIONS: Help me answer the given question. Do not round off answer in the solutions, instead…

A: concept. capitalized cost. It can be defined as present worth of cash flows associated with the…

Q: CASE 2 Property Value: A Matter of Opinion? You are a loans officer with the Reliable Trust Company…

A: 1. Ans The accounting principle of conservatism is affected. The principle of conservatism states…

Q: A company is investigating three alternatives as follows: Ho Alternative A Initial cost $60,000…

A: Cashflow is an integral part of accounting as it refers to the total amount of money or we can say…

Q: digital format), explain your entire procedure please, make the corresponding tables…

A: Depreciation: It refers to the decrease in the value of an asset over its useful life.…

Q: Assets costing $ 24,000 are expected to be used for 10 years and have a salvage value of $ 4,000 at…

A: Depreciation refers to an accounting method used to allocate the cost of a tangible asset over its…

Q: * Your answer is incorrect. Compute the depreciation for this asset for 2022 and 2023 using the…

A: The sum of year's digits approach is a finance and accounting strategy for allocating an asset's…

Q: Q1/A piece of equipment is available for purchase for ($50000), has an estimated useful life of (7…

A: Depreciation expense refers to the fall in the value of the asset due to time usage, wear and tear,…

Q: Required information [The following information applies to the questions displayed below.] While…

A: Introduction MACRS stands for modified accelerated cost recovery system: In order to compute asset…

Q: Cullumber Company purchased a new machine on October 1, 2025, at a cost of $90,880. The company…

A: Depreciation expense under Straight line method = [(Cost of an asset - Salvage value) / Useful life…

Q: Using the MACRS table in your sides covering chapters 9-11 and for an asset purchased at a cost of…

A: The MACRS is the modified accelerated cost recovery system and it is the depreciation tax system…

Q: will be depreciated by the MACRS (GDS) straight-line method of depreciation. The effective income…

A: AE = First cost + PV of after-tax operating expense - PV of tax savings on depreciation…

Q: If a item is purchased in September how is the MACRS depreciation calculated for either a 5 year, 7…

A: Half-Year Convention: The MACRS depreciation schedule simplifies the depreciation calculations for…

Q: b. On March 25, 2021, new parking lots, streets, and sidewalks at the acquired plant facility were…

A: Depreciation Expenses The amount subtracted from gross margin to account for a decrease in the worth…

Q: (b) Compute the annual depreciation that would have been charged from 2009 through 2026. Annual…

A: Depreciation refers to a decrease in the value of assets. Assets such as tangible assets.…

Q: help please answer in text form with proper workings and explanation for each and every part and…

A: First, we need to calculate the depreciation for each year using the Modified Accelerated Cost…

Q: 3. Counselors of Griffin purchased equipment on January 1, 2023, for $67,000. Counselors of Griffin…

A: Introduction: A journal entry is indeed a record of a commercial transaction in a company's…

Q: You buy a car for $35,400. It has an estimated useful life of 12 years and a salvage value of…

A: Depreciation is a decrease in the value of assets due to the passage of time. The reduced amount of…

Q: A contractor purchased equipment for $600 which provided future income of $52,000 after 25 years.…

A: Initial Investment is $600 Future Income is $52,000 Time Period is 25 Years. To Find:- Rate of…

Q: An Equipment was purchased on January 1, 2019 at a cost of 96,000 with residual value of 12,000 and…

A: Depreciation is the process of reducing the value of the assets. It is a non-cash expense of the…

Q: Refer to Exhibit 12.4 in the text. What is the depreciation expense deduction in each of 4 years for…

A: Depreciation is a charge calculated on the value of fixed assets, based on normal wear and tear due…

Q: Requirements ........ 1. Assuming the straight-line method of amortization, make journal entries to…

A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…

Q: Book value Find the book value for the asset shown in the accompanying table, assuming that MACRS…

A: In this we have to calculate the accumulated depreciation for 3 years and deduct it from cost of…

Q: Book value Find the book value for the asset shown in the accompanying table, assuming that MACRS…

A: MACRS rates is provided in IRS website

Q: You buy a motorcycle for $57,500. It has a useful life of 9 years and a salvage value of $3900.00.…

A: Depreciation expense is the expense which defined as the assigned portion of the cost of fixed…

Q: You will not pay more for the property than the sum of the present value of payments generated by…

A: The given details are:Payments generated by the property: $1,000Period of annual payments (years):…

Q: An asset was purchased for $100,000. It has a 5 year life. The asset is expected to have a salvage…

A: Depreciation expense :— It is the allocation of depreciable cost of asset over the estimated useful…

Q: a) A 180% DB switching to Straight Line, 5 years, half year convention, What is the depreciation…

A: The MARCS system has specific depreciation rates for each year of an asset's life.The half-year…

Q: Using DBM, when is the t year with a book value of P8,592 if the asset is bought at a price of…

A: Declining Balance Method :— Under this method of depreciation, depreciation is calculated by…

Q: Please complete the answer for this draw also teh diagram like the given example. Determine how…

A: MACARS = modified accelerated cost recovery system Face value= FV = $100000(given) dr= DRr × Dn…

Q: Use the following information for the next three questions: Entity A determines an indication that…

A: As we know impairment loss = carrying amount- recoverable amount carrying amount =cost -…

Q: You buy an ATV for $17,500. It has a useful life of 8 years and a salvage value of $2000.00. You…

A: A fixed asset is a non-current asset that is purchased with an expectation to support business…

Q: 6. Stone Corp invests in a new earthwork machine. Initial costs are $250,000. The equipment is…

A: Capital budgeting is financial techniques which help in decision making on the basis of future cash…

Q: ) Depreciation of Assets. a) On January 1, 2020, a plastic injection machine was acquired for…

A: Depreciation: Depreciation is a method that reallocates the cost of a tangible asset over its useful…

Q: Recovery period (years) Elapsed time since purchase (years) talled cost 987,000 5 2 walue is $…

A: In this we have to calculate the accumulated depreciation for 2 years and deduct it from cost of…

Q: On NOVEMBER 1, 2020, you purchased equipment for $60,000. The equipment had an estimated salvage…

A: As per your request solve only A and B

Q: You buy a car for $35,400. It has an estimated useful life of 12 years and a salvage value of…

A: Depreciation is the decrease in value of fixed asset due to passage of time and wear and tear.

Q: A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Limited,…

A: Payback period is defined as the number of years required to recover the original cash investment.…

Q: What is the approximate IRR of an asset that (1) sells for $1,120, (2) exists for only 6 years and…

A: The internal rate of return method is an important capital budgeting method that takes into account…

Question

Please show the steps to answer question a, the correct answer is the "economic life of asset A is 3 years, and the economic life of asset B is 6 year". Ignore part b and c,

Thank you

The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent of current value each
year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows.
Initial Operating
Rate of Operating
First Cost
$125,000
$125.000
Asset
Cost
Cost Increase
$30,000
$30,000
13.5%/year
13.5%lyear
MARR
5%
25%
A.
a. Determine the economic lives for assets A and B.
b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B.
c. Explain the difference in economic life between A and B.
Click the icon to view the table of compound interest factors for discrete compounding periods when i= 5%.
a. The economic life of asset A is
years, and the economic life of asset B is
years.
(Type whole numbers.)

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

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

PLEASE MAKE THE SOLUTION COMPLETE, UNDERSTANDABLE AND READABLE. PLEASE DON'T USE EXCEL. JUST USE FORMULA AND COMPUTATION ONLY.
Please answer in excel and show steps, thank you.
To receive economic benefit from an intangible asset, a) The asset must be used more than two years b) The asset must be used for six months c) The asset must be used for a month d) The asset must be used more than one year
Item 2: Entity B purchased equipment for $180,000 on January 1, 2024 with an estimated salvage value $30,000 and a five-year useful life. Compute the annual depreciation and then show what this asset looks like on the balance sheet at the end of the third year (prepare a partial classified balance sheet). Show your work.
Please read instructions and answer each question show work.
Please help me with correct answer thanku
NPV; PI; payback; IRR Pete's Paving provides custom paving of sidewalks and driveways. One of the most labor-intensive aspects of the paving operation is preparing and mixing materials. Sharon Guillon, corporate engineer, has found new computerized equipment to mix (and monitor the mixing of) materials. According to information received by Guillon, the equipment's cost is $580,000 and has an expected life of eight years. If purchased, the new equipment would replace manually operated equipment. Data relating to the existing and replacement mixing equipment follow. Original cost Present book value Existing Equipment $56,000 $32,000 Annual cash operating costs $180,000 Fair value $12,000 Fair value in eight years Remaining useful life $0 8 years Replacement Equipment $580,000 $36,000 Cost Annual cash operating costs Fair value in eight years Useful life $0 8 years a. Assume that the company's cost of capital is 10 percent, which is to be used in discounted cash flow analysis. (1) Compute…
For tangible assets that are amortized, the balance sheet should disclose: the total cost of the asset. accumulated amortization. estimated amortization expense for the next 5 years. all of these choices
Hello, I am needing help with answering question 2 and final question #1.
What is the depreciation deduction, using 200% DB method, after year 4 for an asset that costs #52811 and has an estimated salvage value of $7,000 at the end of its 5-year useful life? Round your answer to 2 decimal places. Add your answer
Please help me
Current Attempt in Progress Blossom Department Store determines it will cost $107,000 to restore the area (considered a land improvement) surrounding one of its store parking lots, when the store is closed in 2 years. Blossom estimates the fair value of the obligation at December 31, 2025, is $93,000. Prepare the journal entry to record the asset retirement obligation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account tities and enter 0 for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit