Martin's Cove Marina has a September 30 year end. On August 15, 2021, it purchased a new marine crane to assist it with the autumn pull out of the boats in the marina. The physical life of the crane is expected to be 15 years, but Martin plans to keep the crane for only 10 years as this represents the asset's useful life to the company and at which point they will trade it in for a newer model. The original cost of the crane is $50,000. The amount of depreciation that Martin should show in its financial statements for the year ended September 30, 2021 is Select one: A. $3,333. x B. $417. C. $5,000. D. $625.

Martin's Cove Marina has a September 30 year end. On August 15, 2021, it purchased a new marine crane to assist it with the autumn pull out of the boats in the marina. The physical life of the crane is expected to be 15 years, but Martin plans to keep the crane for only 10 years as this represents the asset's useful life to the company and at which point they will trade it in for a newer model. The original cost of the crane is $50,000. The amount of depreciation that Martin should show in its financial statements for the year ended September 30, 2021 is Select one: A. $3,333. x B. $417. C. $5,000. D. $625.

Name: Martin's Cove Marina has a September 30 year end. OnAugust 15, 2021,
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Martin's Cove Marina has a September 30 year end. OnAugust 15, 2021, it purchased a new marine crane toassist it with the autumn pull out of the boats in themarina. The physical life of the crane is expected to be15 years, but Martin plans to keep t

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

Which proposal should the company accept? Why?
A mechanical engineer must recommend a new heating system to a commercial building owner. The owner intends to sell the building in 15 years. A gas fired furnace option has a design life of 5 years, an initial cost of $12,000, a replacement cost of $6,000 and annual operating costs of $3,500, but adds no value to the building when sold. A geothermal heat pump system has a design life of 10 years, an initial cost of $16,000, a replacement cost of $9,000, annual operating costs of $2,500, and increases the value of the building by $7,000, when it is sold at the end of year 15. Determine the equivalent uniform annual cost (EUAC) of costs for the option the engineer should recommend at an interest rate of 6.3%. Express your answer in $ to the nearest $10.
Your company is contemplating the purchase of a large stamping machine. The machine will cost $167,000. With additional transportation and installation costs of $5,000 and $11,000, respectively, the cost basis for depreciation purposes is $183,000. Its MV at the end of five years is estimated as $34,000. The IRS has assured you that this machine will fall under a three year MACRS class life category. The justifications for this machine include $45,000 savings per year in labor and $29,000 savings per year in reduced materials. The before-tax MARR is 24% per year, and the effective income tax rate is 28%. Assume the stamping machine will be used for only three years, owing to the company's losing several government contracts. The MV at the end of year three is $47,000. What is the income tax owed at the end of year three owing to depreciation recapture (capital gain)? E Click the icon to view the GDS Recovery Rates (rg) for the 3-year property class. Choose the correct answer below. O…
On January 1, 2024, reliable delivery service purchased a truck at a cost of $65,000. Before placing the truck in service, reliable spent $2500 painting it $2500 replacing tires, and $9500 over hauling the engine the truck should remain in service for five years and have a residual value of $6000. the trucks annual mileage is expected to be 23,000 miles in each of the first four years and 13,000 miles in the fifth year – 105,000 miles in total. And deciding which depreciation method to use Harold Parker, the general manager, requesting depreciation schedule for each of the depreciation methods.( straight line units of production and double declining balance.) prepare the schedules.
On January 2, 2021, Oriole Hospital purchased a $94,800 special radiology scanner from Bella Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. The straight-line method of depreciation is used on this scanner. Annual operating costs with this scanner are $106,000. Approximately one year later, the hospital is approached by Dyno Technology salesperson, Jacob Cullen, who indicated that purchasing the scanner in 2021 from Bella Inc. was a mistake. He points out that Dyno has a scanner that will save Oriole Hospital $26,000 a year in operating expenses over its 3-year useful life. Jacob notes that the new scanner will cost $111,000 and has the same capabilities as the scanner purchased last year. The hospital agrees that both scanners are of equal quality. The new scanner will have no disposal value. Jacob agrees to buy the old scanner from Oriole Hospital for $40,500. (a) If Oriole Hospital sells its old scanner on…
During 2024, Nash constructed a small manufacturing facility specifically to manufacture one particular accessory. Nash paid the construction contractor $5,279,000 cash (which was the total contract price) and placed the facility into service on January 1, 2025. Because of technological change, Nash anticipates that the manufacturing facility will be useful for no more than 10 years. The local government where the facility is located required that, at the end of the 10-year period, Nash remediate the facility so that it can be used as a community center. Nash estimates the cost of remediation will be $632,900. Nash uses straight-line depreciation with $0 salvage value for its plant asset and a 12% discount rate for asset retirement obligations. (a) Your answer is correct. Prepare the journal entries to record the January 1, 2025, transactions. Use the Plant Assets account for the tanker depot. (Credit account titles are automatically indented when the amount is entered. Do not indent…
Jarrod has a small business where he produces ping pong balls. He has an opportunity to update his production process with a piece of equipment that costs $46,000 on June 10, 2023. A new trimming machine for when the ball is being formed. The equipment is expected to have a 12-year service life. The trimming machine also has an estimated residual value of $9,000. Determine for the year 2022 the depreciation expense for each of the methods listed. 1.Straight line 2. Sum-of-the-years'-digits 3. Double-declining balance
On December 1, 2021, HP Corp. is contemplating to invest into a new equipment costing P2,500,000 plus an installation cost of P200,000 to replace its old equipment that has a book value of P400,000 and a remaining useful life of 4 years. The estimated useful life of the new equipment is 4 years and has a salvage value of P500,000. If the company will favor the replacement decisions, the old equipment can be sold for P150,000 but additional working capital investment must be made amounting to P400,000. However, the company must incur a repair cost of P180,000 to continuously use the old equipment. The annual cash operating costs of the old equipment is P4,000,000 while the annual cash operating cost of the new equipment is P2,400,00. At the end of the useful life, cost to remove the new equipment will amount to P100,000. The company uses a tax rate of 35%, requires a payback period is 2.5 years or less, and accepts a minimum accounting rate of return is 15%. Compute for the net…
A construction company is considering the proposed acquisition of a newearthmover. The purchase price is $100,000, and an additional $25,000 is required to modify the equipment for special use by the company. The equipment falls into the MACRS five-year classification (tax life). and it will be sold after five year. (project life) for $50,000. Purchase of the earthmover will have no effect on revenues. but it is expected 10 save the firm $60,000 per year in before-tax operating costs-mainly labor.The firm's marginal tax rate is 40%. Assume that the initial investment is to be financed. by a bank loan at an intrest rate of 10% payable annually. Determine that after-tax cash flow and the worth of investment for this project if the firm's MARR is known to be 12°o.
On January 2, 2021, Twilight Hospital purchased a $92,000 special radiology scanner from Blossom Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. The straight-line method of depreciation is used on this scanner. Annual operating costs with this scanner are $104,000. Approximately one year later, the hospital is approached by Dyno Technology salesperson, Jacob Cullen, who indicated that purchasing the scanner in 2021 from Blossom Inc. was a mistake. He points out that Dyno has a scanner that will save Twilight Hospital $24,000 a year in operating expenses over its 3-year useful life. Jacob notes that the new scanner will cost $109,000 and has the same capabilities as the scanner purchased last year. The hospital agrees that both scanners are of equal quality. The new scanner will have no disposal value. Jacob agrees to buy the old scanner from Twilight Hospital for $43,000. (a) If Twilight Hospital sells its old…
A mechanical engineer must recommend a new heating system to a commercial building owner. The owner intends to sell the building in 15 years. A gas fired furnace option has a design life of 5 years, an initial cost of $13,000, a replacement cost of $7,000 and annual operating costs of $3,500, but adds no value to the building when sold. A geothermal heat pump system has a design life of 10 years, an initial cost of $18,000, a replacement cost of $9,000, annual operating costs of $2,500, and increases the value of the building by $6,000, when it is sold at the end of year 15. Determine the PW of costs for the option the engineer should recommend at an interest rate of 7.5%. Express your answer in $ to the nearest $100.
On January 02, 2021, ACME Incorporated constructed a sea-salt extraction platform and processing plant on the Caribbean Sea for $500,000 cash. The contract runs for 10 years at which time ACME must dismantle the site. The decommissioning and removal costs are estimated at $250,000 and management has publicly announced that it will commit an additional $50,000 to sea-life preservation and study at that time. The company has a December 31 year end and none of the restoration obligation applies to production. An appropriate discount rate for this transaction is 8%. Required: Show your work below each entry and round interim calculations to four decimal places and final answers to the nearest dollar. Assuming that ACME follows ASPE, 1. Prepare all entries related to the site restoration only for 2021 (ignore depletion entries). 2. On January 03, 2023, the restoration obligation was revised and increased by $54,027 (present value of the increase). Prepare the required entry assuming that…