A5 Acme Inc. purchased a metal 3D printer with a cost basis of $350,000, which is expectedto last ten years. There will be no market value. The 200% declining balance method isused to depreciate this asset. (Provide a statement describing each answer).a. What will the depreciation charge be in yearsix?b. What will be the book value at the end of yearfour?c. What will be the gain (or loss) on the disposal of the asset if it is sold for $190,000 afterfouryears?

Double declining balance method: It is the method of charging depreciation where the depreciation is…

Inc. purchased a metal 3D printer with a cost basis of $35 000, which is expec o last ten years. There will be no market value. The 200% declining balance metho sed to depreciate this asset. (Provide a statement describing each answer). . What will the depreciation charge be in yearsix?

Inc. purchased a metal 3D printer with a cost basis of $35 000, which is expec o last ten years. There will be no market value. The 200% declining balance metho sed to depreciate this asset. (Provide a statement describing each answer). . What will the depreciation charge be in yearsix?

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Acme Inc. purchased a metal 3D printer with a cost basis of $350,000, which is expected
to last ten years. There will be no market value. The 200% declining balance method is
used to depreciate this asset. (Provide a statement describing each answer).
a. What will the depreciation charge be in yearsix?
b. What will be the book value at the end of yearfour?
c. What will be the gain (or loss) on the disposal of the asset if it is sold for $190,000 after
fouryears?

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