University Car Wash built a deluxe car wash across the street from campus. The new machines cost $237,000 includinginstallation. The company estimates that the equipment will have a residual value of $28,500. University Car Wash alsoestimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows:YearHours Used2,7002,0002,1001,9001,7002,10042. Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediatecalculations.)UNIVERSITY CAR WA SHDepreciation Schedule-Double-Declining-BalanceEnd of year amountsDepreciationExpenseAccumulatedYearBook ValueDepreciation1346.Total%24

Formula: Depreciation rate = 100 / useful life

Answered: University Car Wash built a deluxe car…

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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At Little Green Apple Produce the owner is considering buying a new large walk in cooler for fruits and vegetables. The new cooler cost $150,000. The annual maintenance cost will be $7,000 starting in year two (the first year will be covered under warrantee). An additional employee will be needed to stock the cooler. The employee will make $16/hr, and start part-time at 20 hours per week. Sale of produce will increase by $100,000 in year one and an additional 10% in year two and 15% in year three. The cost of produce will increase $30,000 in year one and is variable with sales. The part-time employees hours will vary based on additional sales in years two and three. The employee will receive raises of 4% annually and electricity will increase 3% a year. There is no inflation on any other item. Based on this information prepare a pro forma and calculate the project NPV using a 9% discount rate/hurdle rate and calculate the IRR. State if the project should be expected or rejected.…
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On January 1, Celebrity Allures Inc. bought a new popcorn popper for one of their movie theaters. The popper cost $9,000. The expected life is 8 years with a salvage value of $1,000. The popper is expected to produce 50,000 buckets of popcorn over its life. In the first year, the popper produced 9,000 buckets of popcorn. In the second year, the popper produced 12,000 buckets of popcorn. What is the second year depreciation expense on the popcorn popper assuming straight line depreciation? $2,000 $1,000 $1,920 $1,687.50
White Oaks Properties builds strip shopping centers and small malls. The company plans to replace its refrigeration, cooking, HVAC, and other equipment with newer models in the entire center built 9 years ago. The original purchase price of the equipment was $678,000 nine years ago and the operating cost has averaged $ 240,000 per year. Determine the equivalent annual cost of the installed equipment, if the company can now sell it for $176,000. The company's MARR is 25% per year. ( Include a minus sign if necessary). The equivalent annual cost of the installed equipment is $
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $255,000 including installation. The company estimates that the equipment will have a residual value of $22,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows: Year Hours Used 1 3,100 2 1,600 3 1,700 4 2,300 5 2,100 6 1,700 2. Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.)
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University Car Wash built a deluxe car wash across the street from campus. The new machines cost $240,000 including installation. The company estimates that the equipment will have a residual value of $30,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year Hours Used 1 2,600 2 2,100 3 2,200 4 1,800 5 1,600 6 1,700 1)Prepare a depreciation schedule for six years using the double-declining-balance method. 2)Prepare a depreciation schedule for six years using the activity-based method
Quick Copy purchased a new copy machine. The new machine cost $106,000 including installation. The company estimates the equipment will have a residual value of $26,500. Quick Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year Hours Used 2,800 1234 2,000 2,000 3,200 Problem 7-5B (Algo) Part 1 Required: 1. Prepare a depreciation schedule for four years using the straight-line method. (Do not round your intermediate calculations.) QUICK COPY Depreciation Schedule-Straight-Line End of Year Amounts Depreciation Year Expense 1 2 3 4 Total $ 0 Accumulated Depreciation Book Value
As a result of improvements in product engineering, United Automation is able to sell one of its two milling machines. Both machines perform the same function but differ in age. The newer machine could be sold today for $50,000. Its operating costs are $20,000 a year, but in five years the machine will require a $20,000 overhaul. Thereafter, operating costs will be $30,000 until the machine is finally sold in year 10 for $5,000. The older machine could be sold today for $25,000. If it is kept, it will need an immediate $20,000 overhaul. Thereafter, operating costs will be $30,000 a year until the machine is finally sold in year 5 for $5,000. Both machines are fully depreciated for tax purposes. The company pays tax at 35%. Cash flows have been forecasted in real terms. The real cost of capital is 12%. Which machine should United Automation sell? Explain the assumptions underlying your answer.
On January 1, Celebrity Allures Inc. bought a new popcorn popper for one of their movie theaters. The popper cost $8,000. The expected life is 8 years with a salvage value of $200. The popper is expected to produce 50,000 buckets of popcorn over its life. In the first year, the popper produced 9,000 buckets of popcorn. In the second year, the popper produced 12,000 buckets of popcorn. What is the second year depreciation expense on the popcorn popper assuming double declining balance depreciation? $3,500 $1,500 $975 $2,000
Nash Co, recently installed some new computer equipment. To prepare for the installation, Nash had some electrical work done in what was to become the server room, costing $20,600. The invoice price of the server equipment was $200,000. Three printers were also purchased at a cost of $1,900 each. The software for the system was an additional $46,200. The server equipment was believed to have a useful life of eight years, but due to the heavy anticipated usage, the printers were expected to have only a four-year useful life. The software to run the system was estimated to require a complete upgrade in five years to avoid obsolescence. Additionally, it cost $12.600 for delivery. All of the above costs were subject to a 6% non-refundable provincial sales tax. During the installation, a training course was conducted for the staff that would be using the new equipment, at a cost of $9,550. Assume that Nash follows IFRS, and that any allocation of common costs is done to the nearest 1%…
A company has decided to replace its inspection machine with an advanced one. The advanced machine costs $15,000 and will have operating costs of $3,600 in the first year, increasing by $2,000 per year thereafter. The expected salvage value of the new machine is $6,000 at the end of the first year and will decline by 10% of the preceding S.V. each year. Find the missing values in the following table and determine the economic life of the new machine. Total Cost (8%) CR (8%) OC (8%) 3,600 1 10,200 13,800 2 ? ? ... .... .. 3 4332.36 5,495.82 ? 4 ? 6,406.46 ? .......... . 3086.31 7,293.42 10,379.73 OPTIMAL n = A+ta ch Cilo

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