Cortland Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flows of $169,400. The equipment will have an initial cost of $605,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $17,000, what is the annual net income? Ignore income taxes. A.) 152,400 B.) 51,800 C.) 287,000 D.) 186,400
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Cortland Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net
A.) 152,400
B.) 51,800
C.) 287,000
D.) 186,400
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