[The following information applies to the questions displayed below.] Tory Enterprises pays $250,400 for equipment that will last five years and have a $44,800 salvage value. By using the equipment in its operations for five years, the company expects to earn $89,700 annually, after deducting all expenses except depreciation. Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming straight-line depreciation is used.
[The following information applies to the questions displayed below.] Tory Enterprises pays $250,400 for equipment that will last five years and have a $44,800 salvage value. By using the equipment in its operations for five years, the company expects to earn $89,700 annually, after deducting all expenses except depreciation. Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming straight-line depreciation is used.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
![Required information
[The following information applies to the questions displayed below.]
Tory Enterprises pays $250,400 for equipment that will last five years and have a
$44,800 salvage value. By using the equipment in its operations for five years, the
company expects to earn $89,700 annually, after deducting all expenses except
depreciation.
Prepare a table showing income before depreciation, depreciation expense, and net (pretax)
income for each year and for the total five-year period, assuming straight-line depreciation is used.
Year 1
Year 2
Year 3
Year 4
Year 5
Totals
Answer is complete but not entirely correct.
Income Before Depreciation
Depreciation
Net (Pretax)
Income
Expense
$
89,700
89,700
89,700
89,700
89.700
448,500
$
$
100,160 $
100,096 X
36,058 X
9,286 x
0
245,600 $
(10,460) X
29,604
53,642
80,414
89,700
242,900](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3e37d0a9-74c8-4250-9a21-add329f5d305%2Fc52736c8-5e42-41c5-837a-e7eb8c73d536%2Fyml4tf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Tory Enterprises pays $250,400 for equipment that will last five years and have a
$44,800 salvage value. By using the equipment in its operations for five years, the
company expects to earn $89,700 annually, after deducting all expenses except
depreciation.
Prepare a table showing income before depreciation, depreciation expense, and net (pretax)
income for each year and for the total five-year period, assuming straight-line depreciation is used.
Year 1
Year 2
Year 3
Year 4
Year 5
Totals
Answer is complete but not entirely correct.
Income Before Depreciation
Depreciation
Net (Pretax)
Income
Expense
$
89,700
89,700
89,700
89,700
89.700
448,500
$
$
100,160 $
100,096 X
36,058 X
9,286 x
0
245,600 $
(10,460) X
29,604
53,642
80,414
89,700
242,900
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!
Trending now
This is a popular solution!
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