PLEASE HELP ME WITH THIS ACCOUNTING PROBLEM! Current Attempt in ProgressOn January 1, 2024, Waterway Company, a small machine-tool manufacturer, acquired for $2,380,000 a piece of new industrialequipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $86,500. Waterway estimatesthat the new equipment can produce 16,500 machine tools in its first year. It estimates that production will decline by 1,300 units peryear over the remaining useful life of the equipment.The following depreciation methods may be used: (1) straight-line, (2) double-declining-balance, (3) sum-of-the-years'-digits, and (4)units-of-output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation.(a1)Your AnswerCorrect Answer (b1)Compute accumulated depreciation by using MACRS and optional straight-line method for the 3-year period ending December31, 2026. Ignore present value considerations.MACRSMethodsOptional straight-line methodeTextbook and MediaSave for Later$$Accumulated Depreciation2024$$2025$$2026Attempts: 0 of 3 used Submit Answer

Here's the accumulated depreciation for Waterway Company's equipment using the Modified Accelerated…

Answered: Current Attempt in Progress On January…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter10: Long-lived Tangible And Intangible Assets

Section: Chapter Questions

Problem 19E

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Depreciation Jensen Inc., a graphic arts studio, is considering the purchase of computer equipment and software for a total cost of $18,000. Jensen can pay for the equipment and software over three years at the rate of $6,000 per year. The equipment is expected to last 10 to 20 years, but because of changing technology, Jensen believes it may need to replace the system in as soon as three to five years. A three-year lease of similar equipment and software is available for $6,000 per year. Jensens accountant has asked you to recommend whether the company should purchase or lease the equipment and software and to suggest the length of time over which to depreciate the software and equipment if the company makes the purchase. Required Ignoring the effect of taxes, would you recommend the purchase or the lease? Why or why not? Referring to the definition of depreciation, what appropriate useful life should be used for the equipment and software?
REPLACEMENT ANALYSIS St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings from 24,000 to 46,000 per year. The new machine will cost 80,000, and it will have an estimated life of 8 years and no salvage value. The new riveting machine is eligible for 100% bonus depreciation at the time of purchase. The applicable corporate tax rate is 25%, and the firms WACC is 10%. The old machine has been fully depreciated and has no salvage value. Should the old riveting machine be replaced by the new one? Explain your answer.
Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $23,100,000 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 90,000 tons Year 3: 100,000 tons Year 4: 110,000 tons Year 5: 130,000 tons Calculate the depletion expense for the next five years, and create the journal entry for year one.
The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
Current Attempt in Progress M On January 1, 2024, Nash Company, a small machine-tool manufacturer, acquired for $1,190,000 a piece of new industrial equipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $72,200. Nash estimates that the new equipment can produce 12,000 machine tools in its first year. It estimates that production will decline by 1,140 units per year over the remaining useful life of the equipment. The following depreciation methods may be used: (1) straight-line, (2) double-declining-balance, (3) sum-of-the-years'-digits, and (4) units-of-output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation. (a1)
A manufacturing company is considering acquiring a new injection-molding machine ata cost of $150,000. Because of a rapid change inproduct mix, the need for this particular machine isexpected to last only eight years, after which timethe machine is expected to have a salvage value of$10,000. The annual operating cost is estimatedto be $11,000. The addition of the machine to thecurrent production facility is expected to generatean annual revenue of $48,000. The firm has only$100,000 available from its equity funds, so it mustborrow the additional $50,000 required at an interest rate of 10% per year with repayment of principal and interest in eight equal annual amounts. Theapplicable marginal income tax rate for the firm is40%. Assume that the asset qualifies for a sevenyear MACRS property class.(a) Determine the after-tax cash flows.(b) Determine the NPW of this project atMARR = 14%.
Apharmaceutical company has some existing semiautomated production equipment that they are considering replacing This equipment has a present MV of $55,000 and a BV of $33,000. It has five more years of straight-line depreciation available ( kept) of $6,600 per year, at which time its BV would be $0. The estimated MV of the equipment five years from now (in year-zero dollars) is $18,000. The MV rate of increase on this type of equipment has been averaging 4 2% per year. The total operating and maintenance and other related expenses are averaging $26,500 (AS) per year New automated replacement equipment would be leased. Estimated operating and maintenance and related company expenses for the new equipment are $11,900 per year. The annual leasing cost would be $24,100. The after-tax MARR (with an inflation component) is 10% per year (): -25%; and the analysis period is five years, Based on an after-tax, AS analysis, should the replacement be made? Base your answer on the actual IRR of…
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A company is thinking when to replace its old machine. It has two choices: replace the old machine now, or replace it at the end of seven years. Currently, the old machine has a salvage value of $3 million and book value of $1.5 million. If it is not sold, it will require maintenance costs of $770,000 at the end of the year over the nextsix years. The depreciation expense for the machine is $300,000 per year. At the end of six years, the machine will have a salvage value of only $100,000 and a book value of $0. If the company replaces the old machine now, the new machine will cost $4.9 million and will require maintenance costs of $320,000 at the end of each year during its six years economic life. At the end of six years, the new machine will have a salvage value of $900,000. It willbe fully depreciated using the straight-line method. If the company replaces the old machine in six years, a new machine will cost $3.5 million. The company will need to purchase this machine regardless of…
Provide answer in table format B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $384,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 153,600 units of the equipment’s product each year. The expected annual income related to this equipment follows. Sales $ 240,000 Costs Materials, labor, and overhead (except depreciation on new equipment) 128,000 Depreciation on new equipment 32,000 Selling and administrative expenses 24,000 Total costs and expenses 184,000 Pretax income 56,000 Income taxes (20%) 11,200 Net income $ 44,800 1. Compute the payback period.2. Compute the accounting rate of return for this equipment.
Capital Investments Project DC Company is considering the purchase of a new machine. The price of the new machine is $122,000, freight charges are estimated to be $3,000, and installation costs are expected to be $5,000. Salvage value of the new machine is expected to be zero after a useful life of 4 years. Existing equipment could be retained and used for an additional 4 years if the new machine is not purchased. At that time, the salvage value of the equipment would be zero. If the new machine is purchased now, the existing machine would be scrapped. DC Co’s accountant, Erica, has accumulated the following data regarding annual sales and expenses with and without the new machine. Without the new machine, Erica can sell 10,000 units of product annually at a per unit selling price of $100. If the new unit is purchased, the number of units produced and sold would increase by 25%, and the selling price would remain the same. The new machine is faster than the old machine, and it is more…
Capital Investments Project DC Company is considering the purchase of a new machine. The price of the new machine is $122,000, freight charges are estimated to be $3,000, and installation costs are expected to be $5,000. Salvage value of the new machine is expected to be zero after a useful life of 4 years. Existing equipment could be retained and used for an additional 4 years if the new machine is not purchased. At that time, the salvage value of the equipment would be zero. If the new machine is purchased now, the existing machine would be scrapped. DC Co’s accountant, Erica, has accumulated the following data regarding annual sales and expenses with and without the new machine. Without the new machine, Erica can sell 10,000 units of product annually at a per unit selling price of $100. If the new unit is purchased, the number of units produced and sold would increase by 25%, and the selling price would remain the same. The new machine is faster than the old machine, and it is…

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