An asset that is book-depreciated over a 5-year period by the straight line method has B3 = $62,000 with a depreciation charge of $26,000 per year. Determine (a) the first cost of the asset and (b) the assumed salvage value
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create a cash flow diagram/table
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- An asset that is book-depreciated over a 5-year period by the straight line method has C3 = P 2,800,000 with a depreciation charge of P1,170,000 per year. What is the first cost of the asset using straight line method?A company purchases a machine for $800,000. The equipment qualifies as 5-year property for MACRS-GDS depreciation. Before-tax cash flows are as shown below, including a $200,000 salvage value after 5 years. Using a 25% income-tax rate, determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR using an 8% MARRAT.Freeman Engineering paid $40,000 for specialized equipment for use with their new global positioning system/geographic information system (GPS/GIS). The equipment was depreciated over a 3-year recovery period using Modified Accelerated Cost Recovery System (MACRS) depreciation. The company sold the equipment after 2 years for $8,000 when it purchased an upgraded system. Determine the amount of the depreciation recapture or capital loss involved in selling the asset. The amount of capital loss is determined to be $____
- A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $95,000 with $4,500 salvage value after 16 years. The other can be purchased and installed for $95,000 with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $21,000 and $16,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Determine which alternative is less costly, based upon comparison of after-tax annual worth. select an alternative Show the AW values used to make your decision:Conveyor 1: $enter a dollar amount Conveyor 2: $enter a dollar amountHalcrow Yolles purchased equipment for new highway construction in Manitoba, Canada, costing $500,000 Canadian. Estimated salvage at the end of the expected life of 5 years is $50,000. Various acceptable depreciation methods are being studied currently. Determine the depreciation for year 2 using the DDB, 150% DB and SL methods. Solve (a) by hand, and (b) by spreadsheet function.Which of the following is not true about depreciation? a. Depreciation is not a cash flow b. To be depreciable, an asset must have a life longer than 1 year c. A 5-year property will generate regular MACRS-GDS depreciation deductions in 6 fiscal years d. For MACRS-GDS an estimate of the salvage values is required.
- A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $ 60,000 with $ 4,500 salvage value after 16 years. The other can be purchased and installed for $120,000 with $ 4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $ 21,000 and $ 18,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, and has a MARR of 9% after taxes. Determine which alternative is less costly, based upon comparison of after-tax annual worth.A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $70,000 with $3,000 salvage value after 16 years. The other can be purchased and installed for $110,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $18,000 and $14,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a income-tax rate of 25%, and a MARR of 9% after taxes. Use MACRS-GDS(10) with 50% bonus depreciation.An oil refinery has decided to purchase some new drilling equipment for $550,000. The equipment will be kept for 10 years before being sold. The estimated SV for depreciation purposes is to be $25,000. Use this information to solve, If MACRS depreciation is used, the recovery period of the equipment using the GDS guidelines is (a) 3 years (b) 5 years (c) 7 years (d) 10 years.
- A lumber company purchased a tract of land for $70,000 that contained an estimated 25,000 usable trees. The value of the land was estimated at $20,000. In the first year of operation, the lumber company cut down 5000 trees. According to the cost depletion method, the depletion deduction for year 1 is closest to?The constant percentage method will be used to depreciate a machine with an initial cost of P1.2 million pesos and a life of 12 years. What must be the minimal salvage value, such that its book value after five years does not fall below P240,000?Equipment costs P10,000 with salvage value of P500 at the end of 10 years. Find the total depreciation charge for the first three years using the declining balance method.