In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to be used for welding operations, classified as seven-year recovery property, and has been depreciated by the MACRS method. If the robot is to be sold after five years, compute the amounts of gains (losses) for the following two salvage values (assume that both capital gains and ordinary incomes are taxed at 34 %): $20,000 $99,000

In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to be used for welding operations, classified as seven-year recovery property, and has been depreciated by the MACRS method. If the robot is to be sold after five years, compute the amounts of gains (losses) for the following two salvage values (assume that both capital gains and ordinary incomes are taxed at 34 %): $20,000 $99,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Find the disposal tax effect for the asset if sold after 5 years for the following

A: (All amount is in $)YearOpening Book ValuePurchaseDepreciationAccumulated DepreciationClosing Book…

Q: An electrical appliance company purchased an industrial robot costing $300,000 in year 0. The…

A: After-tax salvage value refers to the residual value of an asset or property after it has been sold…

Q: Bob's BLT's purchases a sandwich making machine for $5,929 at the beginning of Year 1. He expects…

A: Depreciation expense :— It is the allocation of depreciable cost of an asset over the estimated…

Q: Electric generating and transmission equipment is placed in service at a cost of $3,400,000. It is…

A: MACRS-GDS stands for "Modified Accelerated Cost Recovery System - General Depreciation System." It…

Q: A machine was purchased 4 years ago for $50,000. The depreciation amount each year was $1 ger has a…

A: There are taxes to paid on the capital gain that means if the equipment is sold above the book value…

Q: Electric generating and transmission equipment is placed in service at a cost of $2,550,000. It is…

A: The IRS issues the MACRS rate for determining the depreciation expense to be recorded under the tax…

Q: Angels Inc. purchases a piece of equipment for $65,000. The equipment has an expected useful life of…

A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…

Q: Please solve this one

A: Answer (1): Option (d). 150% declining balance for 10 years.MACRS and ADS are two depreciation…

Q: Power Manufacturing has equipment that it purchased 5 years ago for $1,850,000. The equipment was…

Q: Question 9) An electrical appliance company purchased an industrial robot costing $320,000 in year…

A: The MACRS depreciation rate for the asset having a useful life of 7 years is stated below by using…

Q: IU purchased a super computer for $15,000. This computer qualifies for 5-year recovery under MACRS.…

A: The after-tax salvage value will be the value after deducting the profit from the sales from SV and…

Q: A company purchases

A: Introduction:Depreciation is an accounting technique that distributes an asset's cost over the…

Q: The company has a list of equipment they sold during the tax year. Please review the list and answer…

A: In the given question we need to answer the following questions : a. Calculate the Realized Gain or…

Q: What is the depreciation deduction each year, using each of the methods below, for an asset that…

A: Depreciation is the reduction in the value of assets due to normal wear and tear, passage of time,…

Q: Pet Supply purchased fixed assets two years ago at a cost of $43,800. It no longer needs the assets,…

A: Depreciation is defined as the proportionate reduction in the value of an asset due to constant use…

Q: Troy Industries purchased a new machine 3 year(s) ago for $80,000. It is being depreciated under…

A: MACRS depreciation schedule specifies the specific depreciation rates. This accumulated depreciation…

Q: A piece of newly purchased industrial equipment costs $980,000 and is classified as seven-year…

A: MACRS is a tax depreciation method.MACRS stands for Modified Accelerated Cost Recovery System. It is…

Q: An office furniture costing $110,000 has a useful life of 10 years. Fedex took $1200 to deliver and…

A: Solution- Office furniture is a 7 year property which is place to service in the forth quarter so we…

Q: Newton Company is considering the purchase of an asset that will provide a depreclation tax shleld…

A: solution : given depreciation tax shield per year = $10,000 tax rate…

Q: On January 1, Mitzu Company pays a lump-sum amount of $2,600,000 for land, Building 1, Building 2,…

A: The depreciation expense is charged on the fixed assets as reduction in the value of the fixed…

Q: The depreciated value of the washing machine can be modeled by the equation V= _______ +…

A: Give that V = depreciated value t = number of years. Initial cost of the machine $1045 Depreciation…

Q: Hayden’s Recreation Center purchased an asset for $240,000 that has $30,000 residual value and a…

A: The objective of the question is to calculate the annual tax savings from the depreciation tax…

Q: You bought equipment for $110,000 3 years ago. Today you have an offer to sell your equipment for…

A: The question is based on the concept of depreciation and tax shield for depreciation of machine.

Q: Ten years ago you purchased a small apartment complex for $900,000. You borrowed $700,000 at 5…

A: Purchase price: 900,000 Sale price: 1,250,000 Borrowed amount:700,000 Original depreciation…

Question

In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to be used for
welding operations, classified as seven-year recovery property, and has been depreciated by the MACRS method. If the
robot is to be sold after five years, compute the amounts of gains (losses) for the following two salvage values (assume
that both capital gains and ordinary incomes are taxed at 34%): $20,000 $99,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Explain MACRS

VIEW

Step 2: Calculate book value at the end of fifth year

VIEW

Step 3: Calculate gain or loss

VIEW

Step 4: Calculate gain or loss

VIEW

Solution

VIEW

Step by step

Solved in 5 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Required information [The following information applies to the questions displayed below.] Tory Enterprises pays $256,400 for equipment that will last five years and have a $45,400 salvage value. By using the equipment in its operations for five years, the company expects to earn $90,300 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 8 O Income Before Depreciation $ reciation Expense 0 $ 6 delete home 10
A company purchased a new forging machineto manufacture disks for airplane turbine engines.The new press cost $3,500,000, and it falls into aseven-year MACRS property class. The companyhas to pay property taxes to the local township forownership of this forging machine at a rate of 1.2%on the beginning book value of each year.(a) Determine the book value of the asset at thebeginning of each tax year.(b) Determine the amount of property taxes over themachine’s depreciable life.
A mixer was purchased two years ago for $63346 and can be sold for $171667 today. The mixer has been depreciated using the MACRS 5-year recovery period and the firm pays 40 percent taxes on both ordinary income and capital gain. Find the after tax proceeds.
Haresh
Your employer just purchased $218,000 of equipment that is classified as five-year MACRS property. The MACRS rates are .2, .32, .192, .1152, .1152, and .0576 for Years 1 to 6, respectively. What will be the book value of this equipment at the end of three years assuming no bonus depreciation is taken?
Vijay
Troy Industries purchased a new machine 3 year(s) ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule.. Assume 21% ordinary and capital gains tax rates. What is the book value of the machine? b. Calculate the firm's tax liability for each case if it sold the machine for each of the following amounts: $ 100,000, 56,000 , 23,200 and $ 15,000
Wild Flour Bakery purchased a new bread oven for $125,000. Shipping charges were $1,150, and installation amounted to $750. The oven is expected to last 5 years and has a trade-in value of $5,000. If Wild Flour elects to use the straight-line method, calculate the annual depreciation of the oven.
A tax and duty free importation of a 30 hp sandmill for paint manufacturing cost P 360,000. Bank charges arrastre and brokerage cost P 5,000. Foundation and installation cost were P 25,000. Other incidental expenses amount to P 20,000. Salvage value of the mill is estimated to be 60,000 after 20 years. Find the appraisal value of the mill, using straight-line depreciation at the end of 15 years. 17,500.00 235,000.00 147,500.00 135,000.00 60,000.00 174,500.00
Max Corporation purchased a machine for $80,000 and depreciated it straight-line to zero over its 8-year life. After six years, Max sold the machine for $38,000. If Max has a 21% tax rate, what is the cash flow associated with the sale of the machine? $41,780 $20,000 $35,900 $34,220 $38,000
Bart paid $150,000 for a piece of equipment for his business. Bart's income statement puts the straight line depreciation rate at 20%, and the equipment is expected to have a residual value of $1,000 at the end of its useful life, which is expected to be five years. Total Book Value Useful life $150,000 5 years 20% Straight line depreciation (%) Double declining balance (5) Double Declining Balance Depreciation Book Value Year (Beginning of Year) 1 2 5 Depreciation Rate Depreciation Expense Accumulated Depreciation Book Value (End of Year) Using double declining balance depreciation, what is the value of the piece of equipment at the end of year one? O $60,000 0 $90,000 $100,000
Mike’s Tires purchases a new piece of equipment for $5,200. It also pays $500 for installation and$200 for delivery. If the company expects the equipment to last for 10 years, with a $900 residual value,calculate the following: a. Depreciable cost b. Straight-line rate c. Annual straight-line depreciation.