A machinery was brought in the years 2017 for $100000. The life of the machinery is 10 years. The method of depreciation used was straight line to zero. Due to obsolescence, company wants to dispose the asset in the year 2020 and fetch the disposable value of $50000. If the rate of tax is 30%, the net cash flow from salvage would be a $56000 b $26000 c $14000 d $20000
A machinery was brought in the years 2017 for $100000. The life of the machinery is 10 years. The method of depreciation used was straight line to zero. Due to obsolescence, company wants to dispose the asset in the year 2020 and fetch the disposable value of $50000. If the rate of tax is 30%, the net cash flow from salvage would be a $56000 b $26000 c $14000 d $20000
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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A machinery was brought in the years 2017 for $100000. The life of the machinery is 10 years. The method of depreciation used was straight line to zero. Due to obsolescence, company wants to dispose the asset in the year 2020 and fetch the disposable value of $50000. If the rate of tax is 30%, the net cash flow from salvage would be
a $56000
b $26000
c $14000
d $20000
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