Keira's Kar Company purchases a Machine and incurs the following costs: $250,000 $5,000 $1,500 $2,000 $500 Purchase Price Sales Tax Installation Cost Electricity Costs for the Year Deliver Costs Required: a. Calculate the Total Cost of the Machine and RECORD the purchase for CASH in the Journal. b. Keira estimates the MACHINE will have a $10,000 Salvage Value and a 5 Year useful life. Calculate the annual DEPRECIATION EXPENSE and RECORD it in the Journal. d. c. After Year 1... What is the Book Value or Carrying Value of the Machine? Assume that after 5 years, and the Machine is FULLY Depreciated (Accumulated Depreciation Balance = $257,000), Keira sells the Machine for $8,000 Cash. Calculate the Gain or Loss on Sale.....and Record the Sale of the Machine in the Journal.

Keira's Kar Company purchases a Machine and incurs the following costs: $250,000 $5,000 $1,500 $2,000 $500 Purchase Price Sales Tax Installation Cost Electricity Costs for the Year Deliver Costs Required: a. Calculate the Total Cost of the Machine and RECORD the purchase for CASH in the Journal. b. Keira estimates the MACHINE will have a $10,000 Salvage Value and a 5 Year useful life. Calculate the annual DEPRECIATION EXPENSE and RECORD it in the Journal. d. c. After Year 1... What is the Book Value or Carrying Value of the Machine? Assume that after 5 years, and the Machine is FULLY Depreciated (Accumulated Depreciation Balance = $257,000), Keira sells the Machine for $8,000 Cash. Calculate the Gain or Loss on Sale.....and Record the Sale of the Machine in the Journal.

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: Determine, the number of years the machine must be used to obtain payback at MARR values of, 0%, 8%…

A: The most commonly used capital budgeting technique for evaluating capital expenditure proposals is…

Q: The Baker Company purchased a piece of equipment with the following expected results: (Ignore income…

A: The initial cost of an asset refers to the total amount of money spent or liabilities incurred to…

Q: Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various…

A: Calculation of Accounting Rate of Return Accounting Rate of Return = Average Annual Net income/…

Q: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it…

A: Net present value of the project means difference of present value of cash inflows and present value…

Q: Quary Company is considering an investment in machinery with the following information. Initial…

A: Net cash flows is the difference between a company's cash inflows and outflows over a specified…

Q: URGENTLY REQUIRED HKU purchased a face mask making machine to make face mask for the students and…

A: Payback time is the time required to recover the initial cost of the investment.

Q: p=.30 p=.30 First cost $40,000 $40,000 $40,000 Annual savings 2,000 5,000 8,000 Annual…

A: The machine has an 8-year lifespan.The MARR for the firm is 7%. Find out the machine's NPW.

Q: Linda’s Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various…

A: 1. Calculate Accounting rate of return . Hence, Accounting rate of return is 9,50%

Q: Calculate the net present value and profitability index of each machine. Assume a 9% discount rate.…

A: Net present value of machine can be calculated as initial investment done minus present value of…

Q: An energy production company has the following information regarding the acquisition of new…

A: Tax Depreciation Values refer to the calculated amounts used for tax purposes to reflect the gradual…

Q: Marshall Company purchases a machine for $1,000,000. The machine has an estimated residual value of…

A: To calculate depreciation using the units-of-production method, we need to determine the…

Q: impany considering the acquisition of a machine that costs $543,000. The machine is expected to have…

A: The question is related to Capital Budgeting. The Cash Payback Period is calculated with the help of…

Q: Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following…

Q: da Company is considering the purchase of a machine and has compiled Initial cost One-time training…

A: Payback period one of the simple method of capital budgeting and it is period required to recover…

Q: An energy production company has the following information regarding the acquisition of new…

A: B = Purchase price + Installation cost + Delivery cost S = 10% of purchase price n = Tax recovery…

Q: Initial investment (2 1imos) Useful life Salvage value Annual net income generated. LLT's cost of…

A: Present value (PV) is a financial concept that refers to the current value of a future sum of money…

Q: Wizard Company has an old machine that is fully depreciated but has a current salvage value of…

A: Data given:Salvage value of fully depreciated machine= $10,000Cost of new machine= $60,000Useful…

Q: Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking…

A: Net present value (NPV) is the difference between the current value of cash and the future worth of…

Q: A machine was purchased with an amount of P375,000.00 and a modification cost of P100,000.00 after…

A: Capitalization costs include: Installation costs Labor charges Transportation costs Interest…

Q: Cheyenne Company is considering the purchase of a machine with an estimated useful life of 5 years…

A: The question is related to Capital Budgeting. The Cash Payback Period is the length of time required…

Q: Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following…

A: Equipment is an asset because it is physical, can produce future economic advantages, and has a…

Q: Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking…

A: The net present value is the measure of profitability in which we add up the discounted cash…

Q: Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing…

A: Net annual cash inflows = Cash Revenues - Cash Expenses = $1,500,000 - $1,300,000 = $200,000

Q: Factor Company is planning to add a new product to its line. To manufacture this product, the…

A: Capital budgeting: It is a method of evaluating the projects which required huge investments and…

Q: Ahmed Corporation is considering replacing a machine that is presently used in its production…

A: Relevant cost is the cost that is considered while making a decision for the business operation of…

Q: Q1) A catering company buys a delivery truck for $34000 for its everyday business. The lifetime of…

A: Straight line method is a technique for computing depreciation and amortization. Otherwise called…

Q: requires $15,000 of repairs during years 12, 25 and 40 • The asphalt pavement requires $125,000 of…

A: Present value is the present value of all costs associated with the operations of the project…

Question

2. Keira's Kar Company purchases a Machine and incurs the following costs:
$250,000
$5,000
$1,500
$2,000
$500
Purchase Price
Sales Tax
Installation Cost
Electricity Costs for the Year
Deliver Costs
Required:
Calculate the Total Cost of the Machine and RECORD the purchase for CASH in
the Journal.
b. Keira estimates the MACHINE will have a $10,000 Salvage Value and a 5 Year
useful life. Calculate the annual DEPRECIATION EXPENSE and RECORD it in the
Journal.
d.
c. After Year 1... What is the Book Value or Carrying Value of the Machine?
Assume that after 5 years, and the Machine is FULLY Depreciated (Accumulated
Depreciation Balance = $257,000), Keira sells the Machine for $8,000 Cash.
Calculate the Gain or Loss on Sale......and Record the Sale of the Machine in the
Journal.

Expert Solution

This question has been solved!

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

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Meaning of cost of the machine and depreciation formula :

VIEW

Step 2: Calculation of cost of the machine :

VIEW

Step 3: Calculation of depreciation :

VIEW

Step 4: Calculation of book value or carrying value of machine after year 1 :

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

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

Linda’s Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) $ 1,080,000 Useful life 10 years Salvage value $ 120,000 Annual net income generated 95,040 LLT’s cost of capital 15 % Assume straight line depreciation method is used. Required:Help LLT evaluate this project by calculating each of the following: 1. Accounting rate of return. (Round your percentage answer to 1 decimal place.) 2. Payback period. (Round your answer to 2 decimal places.) 3. Net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Cash Outflows and negative amounts should be indicated by a minus sign. Round your "Present Values" to the nearest whole dollar amount.)
Uramilaben
Agranary purchases a conveyor used in the manufacture of grain for transporting, filling. or emptying. It is purchased and installed for $80,000 with a market value for salvage purposes that decreases at arate of 20% per year with a minimum of value $1.750, Operation and maintenance is expected to cost $15.000 in the first year, increasing $1.060 per year thereafter. The granary uses a MARR of 15%. What is the optimum replacement interval for the conveyor? years, Click here to access the TVM Factor Table Calculator For calculation purposes, use 5 decimal places as displayed in the factor table provided.
The information below relates to the purchase of equipment: investment in the project: $10,000 Net annual cash inflows: 2,400 Working capital required: 5,000 Salvage value of the equipment: 1,000 Life of the project: 8 years At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the project, using a discount rate of 10% $606 $8,271 ($1,729) $1,729
Heidi Company is considering the acquisition of a machine that costs $453,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash inflow of $119,000, and annual operating income of $80,621. The estimated cash payback period for the machine is (round to one decimal point)? Oa. 18 years Ob. 5.6 years Oc. 50 years Od. 65 years
Q1) A catering company buys a delivery truck for $34000 for its everyday business. The lifetime of the truck is estimated Five years and the production life in Kilometers is 200 000 KM. The residual value at the end of its lifetime is $4000. The truck has the following production in five years. Year 1 30 000 KM Year 2 40 000 KM Year 3 50 000 KM Year 4 70 000 KM Year 5 10 000 KM Requirements: Compute the Depreciation Expense under the following methods. Double Declining Balance Method. Sum-of-year-digit Method
A wedding maching custs $250,000. A facility purchases one and plans to use it for 10 years, at 'which point it will have a value of 35,000. calculate the depreciation allowance and book value after 5 yrak of use using Straight line depreciation balance depreciation (a) (b) using deckning () Uring MACKS 7-year property with 50% bonus depreciation (d) using MACKS 7- year property with 50% bonus depreciation of the machine is sold if in year s?
1. A machine is purchased for $50,000. Its annual maintenance costs are $1000. Every 4 years the machine requires a complete overhaul at a cost of $4,000. The machine has a lifespan of 20 years with a salvage value at that time of $10,000. a) Create a cash flow diagram for the machine lifespan costs. b) What additional information might be useful in determining if the should purchase this machine? c) Of the factors you have identified as important (part (b)) what are the most critical (top two perhaps) that should be further investigated/resolved? company
An energy production company has the following information regarding the acquisition of new gas turbine equipment. Purchase price = $780,000 Trans-oceanic shipping and delivery cost $4300 Installation cost (1 technician at $1600 per day for 4 days) = $6400 Tax recovery period = 15 years Book depreciation recovery period = 10 years Salvage value = 10% of purchase price Operating cost (with technician) = $185,000 per year The manager of the department asked your friend in Accounting to enter the appropriate data into the tax-accounting program. What are the values of B, n, and S in depreciating the asset for tax purposes that he should enter?
Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $151,640, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? Note: Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%. 2. Using a discount rate of 10%, what is the machine's net present value? Interpret your results. 3. Suppose the new machine would increase the company's annual cash inflows, net of expenses, by only $35,030 per year. Under these conditions, what is the internal rate of return? Note: Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as…
Wizard Company has an old machine that is fully depreciated but has a current salvage value of $10,000. The company wants to purchase a new machine that would cost $60,000 and have a five-year useful life and zero salvage value. Expected changes in annual revenues and expenses if the new machine is purchased are: Increased revenues $10,000 $120,000 Increased expenses 14,000 Salary of additional operator Supplies Depreciation 12,000 Maintenance Increased net income 8.000 20.000 $30,000 (ignore income taxes in this problem.) Required: 1. What is the payback period on the new equipment? 2. What is the simple rate of return on the new equipment?
Crane Corp. is considering purchasing one of two new processing machines. Either machine would make it possible for the company to produce its products more efficiently than it is currently equipped to do. Estimates regarding each machine are provided below: Machine A Machine B Original cost $113,900 $278,300 Estimated life 10 years 10 years Salvage value -0- -0- Estimated annual cash inflows $29,700 $60,100 Estimated annual cash outflows $7,600 $14,800 Calculate the net present value and profitability index of each machine. Assume an 8% discount rate. Machine A Machine B Net present value top row, profitability index bottom row Which machine should be purchased? Crane Corp. should purchase select a machine .