Data Example E Cost of equipment needed Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five years Annual revenues and costs: $120,000 $80,000 $40,000 $20,000
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- Problem 9Hilarious Company provided the following data pertaining to machinery on the date of revaluation: Cost Replacement costMachinery 4, 500, 000 7, 500, 000Accumulated depreciation 900, 000 Age of asset 3 yearsRevised Life of the asset 10 years Required:1. Appreciation or revaluation increase2. Carrying amount3. Depreciated replacement cost4. Revaluation surplus5. What is the original life of the asset?6. Prepare the journal entry to record the revaluation 7. What is/are the rules in solving the problem?Q.A company purchased an asset that has an installed cost of $3,000,000. The asset qualifies for a 20% CCA rate. What is the beginning UCC for year 2?Question 3 A Company has 20 days as average raw material inventory holding period (AAI), 15 days processing time, 10 days finished goods inventory holding time, 20 days’ average receivable collection period (ACP) and 30 days’ average payment period. The Company estimated for 2022 that raw material costs shall be $15 million, processing costs shall be $ 5 million, raw materials and finished goods holding costs shall be $3 million and marketing and collection costs shall be $1 million. Required a) Calculate the operating cycle (OC) and cash conversion cycle (CCC)? b) calculate working capital requirement of the company for 2022 assuming 365 days in a year?
- Choose the correct answer: 9. All current assets are either cash or assets that will be converted into cash or consumed within twelve months or the operating cycle, if that is longer than one year. Select one: True False 10.Property, plant, and equipment includes machinery, equipment, and inventories. Select one: True False 11.Intangible assets usually are reported in the statement of financial position as current assets. Select one: True FalseYear Schedule A Schedule B Schedule C 1 $6,000 $10,125 $8,600 2 3,600 13,500 6,450 3 2,160 13,500 7,310 4 1,296 13,500 6,450 5 444 3,375 4,300 6 6,880 7 4,730 8 Total $13,500 $54,000 $44,720 1. How would you adjust Schedule B if, at the beginning of Year 3, the asset was estimated to have 5 more years of life remaining, but with a residual value that was $2,500 higher? The total depreciation for this asset now will be $. The depreciation amount for Year 3 will be $.Asset End of year Amount Appropriate Required Return C 1 - 16% 2 - 3 - 4 - 5 $35,000
- Exercise 10-24 On December 31, 2020, Vaughn Inc. has a machine with a book value of $1,353,600. The original cost and related accumulated depreciation at this date are as follows. Machine $1,872,000 Less: Accumulated depreciation 518,400 Book value $1,353,600 Depreciation is computed at $86,400 per year on a straight-line basis.Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal. Your answer is partially correct. Try again. A fire completely destroys the machine on August 31, 2021. An insurance settlement of $619,200 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If…Question 5The following balances were extracted from the books of Billion Precision for the yearended 31 December 2020.Dr (RM) Cr (RM)Land 500,000Building 200,000Motor vehicles 120,000Plant and machinery 70,000Profit b/f as at 01.01.2020 237,650Capital 438,000Acc depreciation as at 1.1.2020 :-Building 60,000-Motor Vehicles 69,250-Plant & Machinery 40,000Returns 3,600 4,100Revenue 800,000Purchases 400,000Discounts 5,0006Carriage inwards 7,700Opening inventory 52,000Provision for bad debts 2,000Trade receivables / Trade payable 66,000 43,200Advertising 18,000Staff training cost 4,000Bad debts 12,500Motor expenses 27,000Rental 90,000Bank 7,600Wages and salaries 126,0001,701,800 1,701,800Additional information:i.i. The provision for bad debts should be 4% of trade receivables.ii. Depreciation is to be charged as follows:-Buildings 2% on cost.-Plant and machinery 20% on cost.-Vehicles 25% on cost.iii. The closing inventories is valued at RM57,000.Required:a. Prepare the Statement of…Revision of depreciation Equipment with a cost of 180,000 has an estimated residual value of 14,400, has an estimated useful life of 16 years, and is depreciated by the straight-line method. (A) Determine the amount of the annual depreciation. (B) Determine the book value at the end of the tenth year of use. (C) Assuming that at the start of the eleventh year the remaining life is estimated to be eight years and the residual value is estimated to be 10,500, determine the depreciation expense for each of the remaining eight years.
- QUESTION 26 BMI’s East Division has a cost of capital of 20 percent. Selected financial information for the first year of business follows. Sales revenue $ 1,800,000 Income 340,000 Investment (beginning of year) 1,800,000 Current liabilities (beginning of year) 240,000 R&D expendituresa 600,000 a R&D (Research and Development) is assumed to benefit three years. All R&D is spent at the beginning of the year. East Division’s EVA (economic value added) is: A. $356,000 B. $260,000 C. $295,000 D. $108,000 E. $308,000Problem 5 - Property Plant and Equipment Requirements: Calculate the (A) Cost Basis, (B) Straight line, and (C) Activity Method for Depreciation Purchase of a Truck Given cost base Price of $ 110,000 Tax and delivery $ 10,000 Salvage Value $ 20,000 Asset Life 5 years Estimated Mileage Traveled per year Yr 1 50,000 Yr 2 40,000 Yr 3 35,000 Yr 4 40,000 Yr 5 45,000 210,000 Miles (A) Cost Basis Calculations: (B) Straight Line Method Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Calculations: (C) Activity Method Yr 1 Yr 2 Yr 3 Yr 4 Yr 5…24). from the following facts,for the sum of years digits what is given: cost : $15,000 residual value : $4000 est useful life: 4 years required: what is accumulated depreciation for the end of year 3