Answered: 1. A central air conditioning unit was…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. A central air conditioning unit was installed on January 1, 2000 at an initial cost of P650,000 and was expected to have a salvage value of P50,000 after a life of 7 years. a. What amount of depreciation had accumulated in a sum-of-the-years’-digit method at the end of 2003? b. Using the declining balance method, determine the depreciation charged for 2004 and the book value at the end of 2004. c. If the equipment was sold on Jan 1, 2005 for P100,000, what amount of loss would result from this sale if sinking fund method was being used with interest of 12% per year? 2. The cost of a Tajima embroidery machine is P1.2M and the cost of installation is P50,000. If the salvage value is 10% of the cost of the machine at the end of 10 years, determine the book value at the end of the 3rd year. Use Straight-Line Method. 3. During the construction of a highway bypass, earth moving equipment costing P400,000 was purchased for use in transporting fill from the borrow pit. At the end of the 4-year project, the equipment will be sold for P200,000. The schedule for moving fill calls for a total of 100,000 cubic feet during the project. In the first year, 40% of the total fill is required; in the second year, 30%; in the third year 25%; and in the final year, the remaining 5%. Determine the service-output depreciation schedule.

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