You purchased in 2020 a new machine at $120,000 by trading it with an old machine. The old machine got sold at $40,000 and has a book value of $20,000. Your new machine belongs to Class 6, which IRS added to its MACRS depreciation schedules for personal property. Depreciation is calculated based on MACRS. a) Determine the Cost Basis. b) Calculate the depreciation amount throughout your full recovery period. c) Dotermine the denreciation 2034 if

You purchased in 2020 a new machine at $120,000 by trading it with an old machine. The old machine got sold at $40,000 and has a book value of $20,000. Your new machine belongs to Class 6, which IRS added to its MACRS depreciation schedules for personal property. Depreciation is calculated based on MACRS. a) Determine the Cost Basis. b) Calculate the depreciation amount throughout your full recovery period. c) Dotermine the denreciation 2034 if

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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Mr. Wonder purchased a machine amounting to P7,000,000 on January 1, 2013 providing the newest kind of technology to improve their operations. It has a useful life of 20 years and a salvage value of P500,000. However, on June 30, 2018, they decided to dispose it to liquidate some of its debts. Therefore, they classified it as held for sale. The fair value of the machine on that date P5,100,000 and the cost of disposal is P100,000. On November 30, 2019, the company decided again to continue to use it since they were able to obtain funding from their investors through follow-on offering of additional shares to pay their currently maturing obligations. On this date, the fair value of the machine is P4,900,000 and the cost of disposal is P50,000. How much is the gain or loss in the reclassification in 2019?
On April 30, 2021, Leo purchased and placed in service a new car that cost $69,600. The business use percentage for the car is always 100%. He does not take the additional first-year depreciation or any § 179. If required, round your answers to the nearest dollar. Click here to access the depreciation table of the textbook. Click here to access the limits for certain automobiles. a. What MACRS convention applies to the new car? Half-year b. Is the automobile considered "listed property"? Yes c. Leo's cost recovery deduction in 2021 is $ 10,000 X and for 2022 is $ 16,000 X
Katie, your Accounting Manager, has asked you to calculate the depreciation for the new company car. The company purchased the new car on May 1, 2018. The purchase price was $22,600 and had a useful life of 3 years. The salvage or residual amount is 5% of the purchase price. Katie estimated that the car would be driven for 93,000 total miles. In year 1, the car was driven 48,900 miles. In year 2, the car was driven 35,180 miles, and in year 3, the car was driven 12,300 miles. Round the cost per mile to two decimal places. Calculate the total depreciation expense in Years 1 through 3 using the units of activity (production) method.
I would like to check my answer to number 5 if you can write it out for me.
Mr. Jhonny bought a car worth P900,000 last January 1, 2000, and intend to sell it for P300,000after its 10-year life.a) What amount had accumulated in the depreciation reserve at the end of 2003 if thedeclining-balance method was used? (b) Using sum-of-the years digit method, determine the depreciation charge for 2004 and thebook value at the of 2004. (c) If, on June 30, 2003, he decided to sell the old car at book value and buy a new carfor P1,000,000, how much more money should Jhonny borrow to buy the new car if heused the straight-line method in computing the depreciation every 6 months and madeit a point to deposit the said amount in a bank that offers a 10 percent compoundedsemiannually?
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Your client, Felix Hammond, the Chairman of a small local company, recently bought a motor van for GH₵15,000 on 1st January, 2016. The expected useful life of the motor van is three (3) years and at the end of the useful life it could be sold for GH₵3,500. He has asked you to clarify some points concerning depreciation. He later disposed of the motor van on 1st February, 2018 for GH₵6,300.Required:(a) Explain the aim of charging depreciation in the financial statements.7(b) Explain two methods of depreciation and a reason behind a choice.(c) Calculate the rate of depreciation using the reducing balance method.(d) Calculate the value of depreciation to be charged for 31st December, 2017.(d) Calculate the gains on the disposal of the motor van on 1st February, 2018.
On May 1st, 2015, Nancy Silva paid $870,000 for a commercial building. She later sold the building on August 27th, 2021, for $1,850,000. Find the depreciation amount in 2015 using the appropriate MACRS GDS method.
If an item is capitalized why do you think different depreciation methods are allowed? Does the depreciation method chosen impact Net Income in the short term? What about over the life of the asset? Assume you have an asset with original cost of $150,000 and accumulated depreciation of $30,000 when you spend $10,000 on the asset. If the $10,000 is an ordinary repair what is the Book Value Before and the Book Value after the $10,000 expenditure? If the $10.000 expenditure is an Extraordinary Repair (extends the life of the asset) and is recorded as a debit to Accumulated Depreciation and a credit to Cash What is the Book Value Before and the Book Value after the $10,000 expenditure? if the expenditure is a Betterment (improves the function of the asset) and is recorded as a debit to the asset and a credit to Cash. What is the Book Value Before and the Book Value after the $10,000 expenditure?
The Dauten Toy Corporation currently uses an injection molding machine that was purchased prior to the new tax legislation. The machine is being depreciated on a straight- line basis, and it has 6 years of remaining life. Its current book value is $2,400, and it can be sold for $2,600 at this time. Thus, the anual depreciation expense is $2,400/6= $400 per year. If the old machine is not replaced, it can be sold for $500 at the end of its useful life. Dauten offered a replacement machine which has a cost of $10,000, an estimated useful life of 6 years, and an estimated salvage value of $800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase. The replacement machine would permit an output expansion, so sales would arise by $1,000 per year; even so, the new machine's much greater efficiency would cause operating expenses simultaneously increase by $500. Dauten's marginal federal-plus- state tax rate is 25%, and its WACC is 11% What is the NPV of the…
Mr. Wonder purchased a machine amounting to P7,000,000 on January 1, 2013 providing the newest kind of technology to improve their operations. It has a useful life of 20 years and a salvage value of P500,000. However, on June 30, 2018, they decided to dispose it to liquidate some of its debts. Therefore, they classified it as held for sale. The fair value of the machine on that date P5,100,000 and the cost of disposal is P100,000. On November 30, 2019, the company decided again to continue to use it since they were able to obtain funding from their investors through follow-on offering of additional shares to pay their currently maturing obligations. On this date, the fair value of the machine is P4,900,000 and the cost of disposal is P50,000. How much is the gain or loss in the reclassification in 2019? *
A house and lot are for sale for $155,000. It is estimated that $45,000 is the land’s value and $110,000 is the value of the house. The net rental income would be $12,000 per year after taking all expenses, except depreciation, into account. The house would be depreciated by straightline depreciation using a 27.5-year depreciable life and zero salvage value. Mary Silva, the prospective purchaser, wants a 10% after-tax rate of return on her investment after considering both annual income taxes and a capital gain when she sells the house and lot. At what price would she have to sell the house at the end of 10 years to achieve her objective? Assume that Mary has an incremental income tax rate of 24% in each of the 10 years and a capital gain rate of 20%.