A truck costs $50,000 when new and has accumulated depreciation of $35,000. Suppose Wilson Towing exchanges the truck for a new truck. The new truck has a market value of $60,000, and Wilson pays cash of $40,000. Assume the exchange has commercial substance. What is the result of this exchange? a. No gain or loss b. Gain of $5,000 c. Loss of $5,000 d. Gain of $45,000

Q: Caleb Co. owns a machine that had cost $42,400 with accumulated depreciation of $18,400. Caleb…

A: Journal entry: It refers to the recording of the transaction and event takes place in the business…

Q: What is the initial book value of a new piece of equipment given the following information? Note…

A: Book value refers to the amount of an asset according to the books or accounts as shown in the…

Q: The used equipment can be sold today for $4.6 million, and its tax rate is 25%. What is the…

A: After Tax Salvage Value: It is computed by reducing the tax on profit on the sale of equipment from…

Q: A business purchasing an item for business purposes may use straight-line depreciation to obtain a…

A: As given P = C - (C-s)* t / L where C = Cost s = Scrap Value after L number of years

Q: ABC Company purchases a truck by paying $5000 cash and surrendering a piece of equipment with a book…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Wright Corp. Is considering the purchase of a new plece of equipment, which would have an Initial…

A: The question is based on the concept of Financial Management. Payback period is the period in which…

Q: Assume that a company is considering purchasing a new piece of equipment for $240,000 that would…

A: Cost of equipment = $240,000 useful life = 10 years Operating cost of new machine = $20,000…

Q: You purchased a new molding machine for $155,000 by trading in a similarmachine that had a book…

A: Calculation of cost basis of new machine: Answer: Cost basis of new machine for depreciation purpose…

Q: Berry Products is considering two pieces of machinery. The first machine costs P50,000 more than the…

A: When the present value of both the machines would be the same, that discount rate would be…

Q: Opal, Inc. owns a delivery truck that initially cost $40,000. After a depreciation of $15,000 had…

A: Assets means the resources which is owned by business. Liability means the amount which is to be…

Q: A firm is planning to replace an old machine that was acquired several years ago at a cost of…

A: Here in this question, we are required to calculate net cost of investment. For calculating that…

Q: Vandezande Inc. is considering the acquisition of a new machine that costs $461,000 and has a useful…

A: Cumulative cash flows Year 1 =Cash inflow-Initial inventment=$149,000-$461,000=-$312,000

Q: Warren Company purchased a truck for $54,000. Sales tax amounted to $5,400; shipping costs amounted…

A: Fixed assets should be recorded at cost of acquisition. Cost includes all expenditures directly…

Q: The salvage value of the truck at the end of the period amounts to R50 000 and the company uses the…

A: The discounted cash flow method refers to discounting each cash flow in the project's live at the…

Q: Key Corp. plans to replace a production machine that was acquired several years ago. Acquisition…

A: Given Information: Cost of New Machine=P800,000Repair Cost of Old Machine=P200,000Tax Rate=35%

Q: Garrison Corporation is considering the replacement of an old machine that is currently being used.…

A: Sales value of old machine $60,000 Less: Book value of old machine $28,000 Gain on sales of old…

Q: If a dump truck for hauling coal has an estimated net cost of $90,000 and is expected to give…

A: Depreciation:   Depreciation refers to the reduction in the monetary value of a fixed asset due…

Q: Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,000…

A: When a fixed asset is exchanged for another fixed asset and the exchange has commercial substance,…

Q: A firm is planning to purchase a new machine costing ₱2,800,000 with freight and installation costs…

A: Total investment in new machine = Purchase cost + Installation cost + Additional working capital =…

Q: A firm is planning to purchase a new machine costing ₱2,800,000 with freight and installation costs…

A: Working Note # 1 Proceeds from sale of old assets                       = ₱ 52000 Tax Savings…

Q: Pull Company is considering the disposal of equipment that is no longer needed for operations. The…

A:

Q: A firm is planning to replace an old machine that was acquired several years ago at a cost of…

A: Calculation of total cost of new machine  purchase price                 = $800,000 Add :-Trade in…

Q: Company H owns a conveyor belt that costs $85,000 with a residual value of $5,000 and a useful life…

A: Cost of conveyor= $85,000 Residual value= $5,000 Useful life= 10 years Sale value of asset= $61,000

Q: In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for…

A: Whenever a property is sold more than its carrying amount or value, a profit or gain on the sale of…

Q: Fancy's Floral Supply had a cooling system delivery truck with an accumulated depreciation of…

A: Net book value of the Truck = Original cost - Accumulated depreciation = $90000 - 45000 = $45,000

Q: A computer-controlled milling machine will cost Ajax Manufacturing $65,000 to purchase plus $4700 to…

A: Value of machine or asset value = Cost of machine + Installation charges Depreciation = ( Asset…

Q: Zara corporation decided to exchange its old machine that costs $100,000 with a new one. On January…

A: Correct option is  A. $40,000

Q: B2B Co. is considering the purchase of equipment that would allow the company to add a new product…

A: Net present value is the difference between the present value of cash flow and initial investment…

Q: Mr Adam wants to sell his car, which he purchased at RM 85,000 after using it for three years. The…

A: The formula for calculating depreciation value using declining balance method is Depreciation per…

Q: Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the…

A: Calculate the amount at which Calaveras value the pickup trucks.

Q: Cliff Company traded in an old truck for a new one. The old truck had a cost of $300,000 and…

A: Recorded value of new Truck = Fair value of the new Truck received  where, Fair value of the new…

Q: Alisa Trading owns machinery that costs MYR 80,000. It is the policy of the business to charge…

A: DEPRECIATION CHARGE :  = ( COST OF ASSET - ESTIMATED RESIDUAL VALUE ) / ESTIMATED USEFUL LIFE OF…

Q: Byrde Company purchased a truck. The seller asked for $11,400, but Byrde paid only $10,400 after…

A: Fixed are recorded in the financial statement at the acquisition cost . The acquisition cost is the…

Q: A computer-controlled milling machine will cost Ajax Manufacturing $65,000 to purchase plus $4700 to…

A: a) Assumption: It is assumed that the tax rate is 40%.

Q: Daily Enterprises is purchasing a $9.6 million machine. It will cost $46,000 to transport and…

A: Given: Cost of asset = $9,600,000 Cost of installation = $46,000 Life = 5 years

Q: A firm is planning to purchase a new machine costing ₱2,600,000 with freight and installation costs…

A: Net Investment = Total investment - ( Trade-in-allowance for old machine + Salvage of other assets )

Q: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost…

A: Cost of equipment = $ 18,200,000 Depreciated value = 75% Book value now = Cost of…

Q: Vandezande Inc. is considering the acquisition of a new machine that costs $467,000 and has a useful…

A: Payback is a capital budgeting tool which is used to find the time required to recover the invested…

Q: A truck costs $50,000 when new and has accumulated depreciation of $35,000. Suppose Wilson Towing…

A: Book value of old truck = $50,000 - 35,000 = $15,000

Q: Sampaguita Company is considering the sale of a machine with a book value of P80,000 and 3 years…

A: Following is the answer to the given question

Q: An asset which costs $25,000 and has accumulated depreciation of $6,000 is sold for $11,000. What…

A: The value of gain or loss on the sale of the asset is determined by deducting the carrying value of…

Q: Daly Publishing Corporation recently purchased a truck for $30,000. Under MACRS, the first year’s…

A: After-tax cash outflow is calculated by multiplying the cash outflow before tax with the one minus…

Q: A business is planning to purchase new equipment at a cost of £60,000. The equipment is expected to…

A: Given Information : Cost of equipment = Pound 60,000 Expected life of machine = 4 years…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.