On January 1, 2021, we purchased equipment for $24,000 and paid $800 to have the equipment installed in your store. The equipment had an estimated salvage value of $2,000 and an estimated life of 10 years. The equipment was estimated to be able to operate 30,000 hours during its ten-year life. Actual hours of operation in the first three years were: 2,800 Hours 3,200 Нours 3,100 Hours 2021 2022 2023 How much total depreciation should be recorded over the entire ten-year life of the equipment? a. b. Calculate the depreciation expense (rounded to the nearest DOLLAR) for each of the first three years (2021, 2022, and 2023) assuming: (Please show your calculations) 1. Sum of the years' digits method of depreciation Straight line method of depreciation Service hours method of depreciation 175% declining balance method of depreciation 2. 3. 4. If this equipment had been purchased on April 1, 2021 instead of January 1, calculate the depreciation expense for 2021, 2022, and for 2023 (rounded to the nearest DOLLAR) under each of the methods in part b, assuming your company year ends on December 31. (Please show your calculations) с.

On January 1, 2021, we purchased equipment for $24,000 and paid $800 to have the equipment installed in your store. The equipment had an estimated salvage value of $2,000 and an estimated life of 10 years. The equipment was estimated to be able to operate 30,000 hours during its ten-year life. Actual hours of operation in the first three years were: 2,800 Hours 3,200 Нours 3,100 Hours 2021 2022 2023 How much total depreciation should be recorded over the entire ten-year life of the equipment? a. b. Calculate the depreciation expense (rounded to the nearest DOLLAR) for each of the first three years (2021, 2022, and 2023) assuming: (Please show your calculations) 1. Sum of the years' digits method of depreciation Straight line method of depreciation Service hours method of depreciation 175% declining balance method of depreciation 2. 3. 4. If this equipment had been purchased on April 1, 2021 instead of January 1, calculate the depreciation expense for 2021, 2022, and for 2023 (rounded to the nearest DOLLAR) under each of the methods in part b, assuming your company year ends on December 31. (Please show your calculations) с.

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Description: On January 1, 2021, we purchased equipment for $24,000 and paid $800 to have the equipmentinstalled in your store. The equipment had an estimated salvage value of $2,000 and anestimated life of 10 years. The equipment was estimated to be able to ope

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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Give typing answer with explanation and conclusion to all parts Muddy Meadows Earthmoving can purchase a bulldozer for $150,000. After 7 years of use, the bulldozer should have a salvage value of $50,000. What depreciation is allowed for this asset in Year 4 for (a) Straight-line depreciation? (b) 150% declining balance depreciation? (c) 40% bonus depreciation with the balance using 5-year MACRS?
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Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $90,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $40,800. A new piece of equipment will cost $235,000. It also falls into the five-year category for MACRS depreciation. Assume the new equipment would provide the following stream of added cost savings for the next six years. Use Table 12–12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Savings 1 $ 67,000 2 57,000 3 55,000 4 53,000 5 50,000 6 39,000 Year Tax Shield Benefits from Depreciation Aftertax Cost Savings Total Annual Benefits 1 7,430 50,250 $57,680 2 16,212 42,750 58,962 3 8,692 41,250 49,942 4 5,451 39,750 45,201 5 6,756 37,500 44,256 6 3,407 29,250 32,657 The firm’s tax rate is 25 percent and the…
Current Attempt in Progress Tamarisk Company purchased Machine #201 on May 1, 2020. The following information relating to Machine #201 was gathered at the end of May. Price $112,200 Credit terms 2/10, n/30 Freight-in $1,056 Preparation and installation costs $5,016 Labor costs during regular production operations $13,860 It is expected that the machine could be used for 10 years, after which the salvage value would be zero. Tamarisk intends to use the machine for only 8 years, however, after which it expects to be able to sell it for $1,980. The invoice for Machine #201 was paid May 5, 2020. Tamarisk uses the calendar year as the basis for the preparation of financial statements.
A coal company invests $20 million in a mine estimated to have 25 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1070000 tons of coal are extracted and sold. What is the depletion for the first year? O $85600 O $856000 $256800 O Cannot be determined from the information provided
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S Hercules Exercise Equipment Company purchased a computerized measuring device two years ago for $52,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $21,800. A new piece of equipment will cost $142,000. It also falls into the five-year category for MACRS depreciation. Assume the new equipment would provide the following stream of added cost savings for the next six years. Use Table 12-12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Savings 1 L23456 2 5 The firm's tax rate is 25 percent and the cost of capital is 9 percent. a. What is the book value of the old equipment? Note: Do not round intermediate calculations and round your answer to the nearest whole dollar. Book value $ 59,000 51,000 49,000 47,000 44,000 33,000 b. What is the tax loss on the sale of the old equipment? Note: Do not round intermediate calculations and round your…
Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $52,000. The equipment falls into the five-year category for MACRS depreciation and can currently be sold for $21,800. A new piece of equipment will cost $142,000. It also falls into the five-year category for MACRS depreciation. Assume the new equipment would provide the following stream of added cost savings for the next six years. Use Table 12–12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Savings 1 $ 59,000 2 51,000 3 49,000 4 47,000 5 44,000 6 33,000 The firm’s tax rate is 25 percent and the cost of capital is 9 percent. a. What is the book value of the old equipment? (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Book Value b. What is the tax loss on the sale of the old equipment? (Do not…
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