1 May 2015, your company acquired a machine at a cost of $300,000. This machine has an expected a useful life of 20 years in normal conditions, and a residual amount of $10,000. The financial year ends on 30thJune every year. Assume the tax rate is 30%. For tax purposes the asset is depreciated at 10% per annum with no residual value. i)Assume that the managers decided to use the machine more intensively from 1 January to June of 2017. This intensity reduced the useful life of the asset by 20%. Preparethe relevant journal entries for the year ended on 30 June 2017.
1 May 2015, your company acquired a machine at a cost of $300,000. This machine has an expected a useful life of 20 years in normal conditions, and a residual amount of $10,000. The financial year ends on 30thJune every year. Assume the tax rate is 30%. For tax purposes the asset is depreciated at 10% per annum with no residual value. i)Assume that the managers decided to use the machine more intensively from 1 January to June of 2017. This intensity reduced the useful life of the asset by 20%. Preparethe relevant journal entries for the year ended on 30 June 2017.
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 3P
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1 May 2015, your company acquired a machine at a cost of $300,000. This machine has an expected a useful life of 20 years in normal conditions, and a residual amount of $10,000. The financial year ends on 30thJune every year. Assume the tax rate is 30%. For tax purposes the asset is
i)Assume that the managers decided to use the machine more intensively from 1 January to June of 2017. This intensity reduced the useful life of the asset by 20%. Preparethe relevant
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