Two years ago, ABC Co. purchased some equipment for $500,000, and the equipment falls in theMACRS three-year property class. What is the book value of the equipment at the end of year two,assuming the following depreciation rates?Year 1: 33%Year 2: 45%Year 3: 15%Year 4: 7%00O $110,000O $465,000O $35,000

Depreciation for the year 1 = Year 1 depreciation rate*Purchase price of the equipment = 0.33×$500000 = $165000 Depreciation for the year 2 = Year 2 depreciation rate*Purchase price of the equipment = 0.45×$500000 = $225000Accumulated depreciation at the end of year 2 = Depreciation in year 1 + Depreciation in year 2 = $165000+$225000 = $390000 Book value of equipment at the end of year 2 = Purchase price of equipment - Accumulated depreciation = $500000-$390000 = $110000 Correct option for the book value of equipment is $110,000

Answered: Two years ago, ABC Co. purchased some…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Sandhill Motor Corporation bought equipment on January 1, 2025. The equipment cost $340000 and had an expected salvage value of $65000. The life of the equipment was estimated to be 4 years. The depreciable cost of the equipment is O $275000. O $68750. O $65000 O $340000.
Carla Vista Products purchased a machine for $66400 on July 1, 2025. The company intends to depreciate it over 8 years using the double-declining balance method. The salvage value is $6700. Depreciation for 2026 to the closest dollar is $8300. O $33200. O $14525. $13200.
ASAP please, direct thumps up :)
You are a researcher and an investment advisor with an investment bank. Your company is planning to develop its own financial statement analysis to track the performance of its portfolios in a particular listed company in the Ghana Stock exchange. So far, the company has portfolios which consist of the equities of companies in the following sectors of the economy ⚫ Financial - Manufacturing The manufacturing category includes all companies that are non- financial. You have been asked to calculate financial ratios for a five-year period of the chosen company based on the following: Profitability ratios > Efficiency/Activity Ratios Liquidity Ratio Financial Leverage/Debt Rations > Investment/Market Ratios You are required to prepare a report for the company. The report should have the following features: (a) Beautiful back-page with appropriate title (b) Executive Summary (c) Table of Content (d) Introduction in terms of what the document is about The introduction should talk about the…
Hampton Inc. purchased a machine to use in its business. The machine is estimated to have an economic life of 10 (ten) years before it becomes obsolete. The company expects to use the machine for 4 (four) years before it sells the machine to another company. Hampton uses the straight-line depreciation method. Question: How many years should Hampton depreciate this asset over? (4,7,10, or 14)
Ronny’s Red Hat Company purchased machinery on August 3, Year 1 for $150,000. Ronny, the owner, estimated that the machinery would be sold for $30,000 in 10 years. If Ronny’s red Hat Company uses straight line depreciation, what is included in the entry to record the disposition of the asset on July 31, Year 3 if the machinery is sold for $120,000 cash? Question: Is there a loss or gain on disposition? How much?
Aa.2
The XYZ Corporation is investing in a $100,000 piece of machinery with 5-year useful life and $20,000 residual value. a) Using the straight-line method, how much depreciation occurs in year 1? b) Using the double-declining method, how much depreciation occurs in year 1?
Man
Anax Corporation purchased a long-term asset for $100,000. The asset has a 30% CCA rate. At the end of year 5, Anax sold the asset for 25% of its original value. Given this information, determine the value of the terminal loss or recapture at the end of year 5. (Show all the required steps) Solution
3. ABC Company owns a machine that was bought on January 2, 20X8, for P376,000. The machine was estimated to have a useful life of five years and a salvage value of P24,000. ABC uses the sum-of-the-years'-digits method of depreciation. At the beginning of 2021, ABC determined that the useful life of the machine should have been four years and the salvage value P35,200. For the year 2021, ABC should record the depreciation expense on this machine of?
Flounder Corp. bought equipment on January 1, 2022. The equipment cost $330000 and had an expected salvage value of $40000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is $40000. $48333. $290000. $330000.

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS