What will be the asset's annual depreciation on this general accounting question? Company XYZ bought a machine that helps them producewidgets. The machine cost $30,000 and is expected to last10 years. Its "salvage value" (the amount the machine isworth after 10 years of use) is $3,000. What will be the asset'sannual depreciation?

Step 1: Define DepreciationEvery asset used in the business undergoes a decrease in its productivity…

Answered: Company XYZ bought a machine that helps…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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You purchased a stamping machine that cost $60,000 five years ago. At that time, the machine was estimated to have a service life of five years with salvage value of $5,000. These estimates are still good. The property has been depreciated according to a seven-year MACRS property class. Now (at the end of year 5 from purchase) you are considering selling the machine at $10,000. What book value should you use in determining the taxable gains?(a) $10,000(b) $13,386(c) $16,065(d) $17,520
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Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 25% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is (Round to the nearest dollar) (b) Annual depreciaitions and book values: (Round to the nearest dollar) Year 1 2 3 4 Book values at end of year 4 SL $ 150% DB $ 200% DB $ $ C Cost Item Hardware Training Installation Cost $165,000 $16,000 $14,000
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Company XYZ bought a machine that helps them produce widgets. The machine cost $30,000 and is expected to last 10 years. Its "salvage value" (the amount the machine is worth after 10 years of use) is $3,000. What will be the asset's annual depreciation?