Mirriam Company is considering replacing its old machine with a new and more efficient one. The old machine has book value of P100,000, a remaining useful life of 4 years, and annual straight-lin depreciation of P25,000. The existing machine has a current marke value of P80,000. The replacement machine would cost P160,000, have a 4-year life, and will save P50,000 per year in cash operating costs. If the replacement machine would be depreciated using the straight-line method and the tax rate is 40%, what should be the increase in annual income taxes? C b. P 28,000 , Not Selected
Mirriam Company is considering replacing its old machine with a new and more efficient one. The old machine has book value of P100,000, a remaining useful life of 4 years, and annual straight-lin depreciation of P25,000. The existing machine has a current marke value of P80,000. The replacement machine would cost P160,000, have a 4-year life, and will save P50,000 per year in cash operating costs. If the replacement machine would be depreciated using the straight-line method and the tax rate is 40%, what should be the increase in annual income taxes? C b. P 28,000 , Not Selected
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
show formula and solution
Transcribed Image Text:Mirriam Company is considering replacing its old machine with a
new and more efficient one. The old machine has book value of
P100,000, a remaining useful life of 4 years, and annual straight-line
depreciation of P25,000. The existing machine has a current market
value of P80,000. The replacement machine would cost P160,000,
have a 4-year life, and will save P50,000 per year in cash operating
costs. If the replacement machine would be depreciated using the
straight-line method and the tax rate is 40%, what should be the
increase in annual income taxes?
C
b. P 28,000
, Not Selected
c. P 40,000
, Not Selected
d. P 4,000
, Not Selected
Correct answer:
a. P 14,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education