Depreciation and Rate of Return Burrell Company purchased a machine for $47,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $23,500 each year. The tax rate is 20%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset. Straight-line method. If required, round to one decimal place. 2019 % 2020 2021 % 2022 2023 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 2020 % 2021 2022 % 2023 %

Depreciation and Rate of Return Burrell Company purchased a machine for $47,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $23,500 each year. The tax rate is 20%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset. Straight-line method. If required, round to one decimal place. 2019 % 2020 2021 % 2022 2023 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 2020 % 2021 2022 % 2023 %

Name: Depreciation and Rate of ReturnBurrell Company purchased a machine fo
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Depreciation and Rate of ReturnBurrell Company purchased a machine for $47,000 on January 2, 2019. Themachine has an estimated service life of 5 years and a zero estimated residualvalue. The asset earns income before depreciation and income taxes of

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Required information [The following information applies to the questions displayed below.] Tory Enterprises pays $250,400 for equipment that will last five years and have a $44,800 salvage value. By using the equipment in its operations for five years, the company expects to earn $89,700 annually, after deducting all expenses except depreciation. Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming straight-line depreciation is used. Year 1 Year 2 Year 3 Year 4 Year 5 Totals Answer is complete but not entirely correct. Income Before Depreciation Depreciation Net (Pretax) Income Expense $ 89,700 89,700 89,700 89,700 89.700 448,500 $ $ 100,160 $ 100,096 X 36,058 X 9,286 x 0 245,600 $ (10,460) X 29,604 53,642 80,414 89,700 242,900
Economics A company purchased a piece of equipment for $175,000 and sells it after 3 years. The equipment is depreciated by the MACRS method using a five-year period. The annual maintenance cost of the equipment is $3,000. If the equipment is sold at end of 3 years for a value of $100,000, what will be the taxes that has to be paid from the sale of the equipment? Assume that the tax rate is 35%. O $6790 O $11480 O $8136 O No taxis to be paid
Early in January 2019, Tellco Inc. acquired a new machine and incurred $11,000 of interest, installation, and overhead costs that should have been capitalized but were expensed. The company earned net operating income of $89,000 on average total assets of $782,000 for 2019. Assume that the total cost of the new machine will be depreciated over 10 years using the straight-line method. Required: a. Calculate the ROI for Tellco for 2019. b. Calculate the ROI for Tellco for 2019, assuming that the $11,000 had been capitalized and depreciated over 10 years using the straight-line method. (Hint: There is an effect on net operating income and average assets.) c. Given your answers to parts a and b. why would the company want to account for this expenditure as an expense? d. Assuming that the $11,000 is capitalized, what will be the effect on ROI for 2020 and subsequent years, compared to expensing the interest, installation, and overhead costs in 2019? Complete this question by entering your…
A melting machine in a steel plant cost $400000. The salvage value of the machine is 12.5% of the purchase cost. The machine will provide service for 8 years. (i) Prepare a depreciation schedule for the tax purposes (Annual depreciation and Book value) by Declining Balance method. Use a depreciation rate of percentage. (ii) Is the salvage value of the machine maintained in the record?
Presented below is information related to equipment owned by Suarez Company at December 31, 2020. Cost $9,000,000 Accumulated depreciation to date 1,000,000 Expected future net cash flows 7,000,000 Fair value 4,800,000 Suarez intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $20,000. As of December 31, 2020, the equipment has a remaining useful life of 4 years. The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $5,300,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $20,000. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an account title to record the…
On May 22, 2020, Colossal Corporation purchased machinery for $80,000. The useful life of this machinery is estimated at 10 years, with a $10,000 residual value. (i). Assume that Colossal uses straight-line depreciation and the half-year convention. Depreciation expense on this machinery will be: Select one: O a. $4,000 in 2020 and $8,000 in 2021 O b. $3,500 in 2020 and $7,000 in 2021 O c. $8,000 in 2020 and $8,000 in 2021 d. $7,000 in 2020 and $7,000 in 2021
Depreciation for Partial Periods Storm Delivery Company purchased a new delivery truck for $69,000 on April 1, 2019. The truck is expected to have a service life of 10 years or 150,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019 and 20,000 miles in 2020. Storm computes depreciation expense to the nearest whole month. For each method, what is the book value of the machine at the end of 2019? At the end of 2020? (Round your answers to the nearest dollar.) Double-declining-balance method 2019 $ fill in the blank 13 2020 $ fill in the blank 14 Activity method 2019 $ fill in the blank 15 2020 $ fill in the blank 16
Depreciation for Partial Periods Bean Delivery Company purchased a new delivery truck for $42,000 on April 1, 2019. The truck is expected to have a service life of 5 years or 120,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019 and 16,000 miles in 2020. Bean computes depreciation expense to the nearest whole month. Required: 1. Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) a. Straight-line method 2019 2020 b. Sum-of-the-years'-digits method 2019 2020 c. Double-declining-balance method 2019 2020 d. Activity method 2019 2020 2. For each method, what is the book value of the machine at the end of 2019? At the end of 2020? (Round your answers to the nearest dollar.) a. Straight-line method 2019 2020 b. Sum-of-the-years'-digits method 2019 2020 c. Double-declining-balance method 2019 2020 d. Activity method 2019 2020 $
Depreciation and Rate of Return Burrell Company purchased a machine for $31,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $15,500 each year. The tax rate is 20%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset. Straight-line method. If required, round to one decimal place. 2019 26.7 % 2020 34.3 % 2021 48 % 2022 80 % 2023 240 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 10 % 2020 43.33 % 2021 98.89 % 2022 191.49 % 2023 350 X %
On Jan. 1, 2021, Mother, Inc., whose financial year end is every Dec. 31, purchased a unit of equipment at a total cost of P10,000,000. The equipment is estimated to have a useful life of 5 years with a residual value equal to 10% of its cost. How much is the depreciation expense for 2021 using the straight line depreciation method?
Depreciation and Rate of Return Burrell Company purchased a machine for $20,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $10,000 each year. The tax rate is 21%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset. Straight-line method. If required, round to one decimal place. 2019 fill in the blank 1 % 2020 fill in the blank 2 % 2021 fill in the blank 3 % 2022 fill in the blank 4 % 2023 fill in the blank 5 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 fill in the blank 6 % 2020 fill in the blank 7 % 2021 fill in the blank 8…
*attached is the problem REQUIRED: choose the letter What is the interest expense for 2020? a. 200,000b. 115,200c. 106,720d. 0 What is the depreciation for 2020? a. 135,200b. 115,200c. 67,600d. 20,000