Question text A machine was purchased for $125,000. It is expected to have a life of 6 years. What is the carrying amount of the machine after 3 years using the diminishing balance for tax depreciation method? Select one a. $41,667 b. $62,500 C. $37,043 d. $83,333

Question text A machine was purchased for $125,000. It is expected to have a life of 6 years. What is the carrying amount of the machine after 3 years using the diminishing balance for tax depreciation method? Select one a. $41,667 b. $62,500 C. $37,043 d. $83,333

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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eBook The Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $80,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $8,000 per year. If the machine is not replaced, it can be sold for $5,000 at the end of its useful life. A new machine can be purchased for $170,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $55,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% bonus depreciation at the time of purchase. The old machine can be sold today for $55,000. The firm's tax rate is 25%. The appropriate WACC is 9%. a. If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation is considered? Cash outflow should be indicated by a minus sign. Round your answer to…
Question 1 On January 1, 2014, Evers Company purchased the following machine for use in its production process: Machine: The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Instructions a) Calculate the amount of depreciation expense that Evers should record each year of its useful life under the following assumptions. Show your workings. (1) Straight-line method (2) Double declining balance method (3) Units-of-activity method and estimates that the useful life of machine is 125,000 units. Actual usage is as follows: 2014, 45,000 units; 2015, 35,000 units; 2016, 25,000 units; 2017, 20,000 units. b) Which method used to calculate depreciation reports the highest amount of depreciation expense year 1? The highest in year 4? The highest total amount over the 4-year period? in
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Answered Partially Correct Question Workspace Check My Work eBook New - Project Analysis Madison Manufacturing is considering a new machine that costs $350.000 and would reduce pre-tax manufacturing costs by $110.000 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $33,000 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%. 44.45%. 14.81%. and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the project's 5-year life. Madison's marginal tax rate is 25%, and a 14% cost of capital is appropriate for the project. Calculate the project's NPV, IRR, MIRR, and payback. Do not round intermediate calculations. Round the monetary value to the nearest dollar and percentage values and payback to two decimal places. Negative values, if any, should be indicated by a minus sign.
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Knowledge Check 01 A company purchases a machine for $10,000. The estimated residual value is $4,000, and the estimated service life is 4 years or 10,000 units. The company uses the straight-line method of depreciation. The depreciable cost of the asset is: Multiple Choice O $1,000 $1,500 $6,000 $10,000
Question 5 What is the after-tax salvage value of a 3-year MACRS machine with the $10,000 purchase price if it is sold after 3 years at a salvage value of $500? The annual depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%, and the tax rate is 25%. $741 $560.25 $935.25 -$241 O-$60.25
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