Use the depreciation table below to answer the questions that follow: Recovery Year 5 Years 7 Years 10 Years 1 20% 14% 10% 2 32% 25% 18% 3 19% 18% 14% 4 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% Assuming a seven year asset has an original cost of $500,000. The asset is sold for $200,000 at the end of year 4. Calculate the net proceeds form the sale (30% tax rate). Assume a five year asset has a cost of $350,000 and is sold at he end of year 3 for $112,000. Calculate the net proceeds form the sale (30% tax rate). Assume a five year asset costs $700,000. This asset is replacing a seven year asset at the end of year four with an original cost of $500,000. The old asset will be sold for $$310,000. Assuming a 21% tax rate, and an addition to working capital of $25,000, calculate cash flow in year zero.
Use the depreciation table below to answer the questions that follow: Recovery Year 5 Years 7 Years 10 Years 1 20% 14% 10% 2 32% 25% 18% 3 19% 18% 14% 4 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% Assuming a seven year asset has an original cost of $500,000. The asset is sold for $200,000 at the end of year 4. Calculate the net proceeds form the sale (30% tax rate). Assume a five year asset has a cost of $350,000 and is sold at he end of year 3 for $112,000. Calculate the net proceeds form the sale (30% tax rate). Assume a five year asset costs $700,000. This asset is replacing a seven year asset at the end of year four with an original cost of $500,000. The old asset will be sold for $$310,000. Assuming a 21% tax rate, and an addition to working capital of $25,000, calculate cash flow in year zero.
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
Publisher:James A. Heintz, Robert W. Parry
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 3CE
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Use the
| Recovery Year | 5 Years | 7 Years | 10 Years |
| 1 | 20% | 14% | 10% |
| 2 | 32% | 25% | 18% |
| 3 | 19% | 18% | 14% |
| 4 | 12% | 12% | 12% |
| 5 | 12% | 9% | 9% |
| 6 | 5% | 9% | 8% |
| 7 | 9% | 7% | |
| 8 | 4% | 6% | |
| 9 | 6% | ||
| 10 | 6% | ||
| 11 | 4% | ||
| Totals | 100% | 100% | 100% |
Assuming a seven year asset has an original cost of $500,000. The asset is sold for $200,000 at the end of year 4. Calculate the net proceeds form the sale (30% tax rate).
Assume a five year asset has a cost of $350,000 and is sold at he end of year 3 for $112,000. Calculate the net proceeds form the sale (30% tax rate).
Assume a five year asset costs $700,000. This asset is replacing a seven year asset at the end of year four with an original cost of $500,000. The old asset will be sold for $$310,000. Assuming a 21% tax rate, and an addition to
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