Example A machine with a cost of $200 000 & useful life of 8 years was acquired at the beginning of year 1. The machine is revalued every 2 years and the revaluation reserve will be regarded as realised only when the machine is sold. The net replacement cost of the machine was as follows; Beginning of year 3 Beginning of year 5 Beginning of year 7 $160 000 $95 000 $50 000 How will the revaluation increases/decreases be accounted for?

Example A machine with a cost of $200 000 & useful life of 8 years was acquired at the beginning of year 1. The machine is revalued every 2 years and the revaluation reserve will be regarded as realised only when the machine is sold. The net replacement cost of the machine was as follows; Beginning of year 3 Beginning of year 5 Beginning of year 7 $160 000 $95 000 $50 000 How will the revaluation increases/decreases be accounted for?

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Description: • ExampleA machine with a cost of $200 000 & useful life of 8 yearswas acquired at the beginning of year 1. The machine isrevalued every 2 years and the revaluation reserve will beregarded as realised only when the machine is sold. The netreplacemen

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $−95,000 for each of the 5 years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned will always be available. (a) What is the ESL and associated AW of the defender at a MARR of 12% per year? (b) A challenger with an ESL of 7 years and an AWC = $-88,000 per year has been identified. Which AW will be less for the respective ESL periods? Retention Period, Years AW Value, $ per Year 1 -87,000 2 -93,000 3 -85,000 4 -83,000 5 -95,000 a) The ESL of the defender is_____ year(s) with the lowest AW of $_________ . b) The______________ has the lower AW at _________$ for n equal to ______ .
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Use Service-Output Method. A Machine costs ₱80,000 and an estimated life of 10 years with a salvage value of ₱5,000. Assuming that the total service of the machine is 1,497,600 hours and the number of working days per year is 260 days. What is the book value after 4 years if the machine production time a is 24 hours? Answer: BV4 = P 78,750.00Show Solution
A research laboratory which requires P5M for original construction; P100T at the end of every year for the first 6 years and then P120T each year thereafter for operating expenses, and P500T every 5 years for replacement of equipment with interest at 12% per annum. What is the cost of perpetual operation? a. P917,740 b. P977,140 c. P719,740 d. P717,940
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PLEASE SOLVE THIS TWO PROBLEMS ASAP. THANK YOU! A. A machine costs P388868 with a salvage value of P18029 is expected to last for 28537 hours in 5 years. In the first year of service it was used for 8077 hours. Compute the book value at the end of the first year. B.The cost of a certain asset is P486042 , its life is 5 years and scrap value is P9050 . Find the cost of depreciation after the first year using a constant percentage method.
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