Flag A mining corporation purchased $120,000 of production machinery and depreciated is using SOYD depreciation, a 5 year depreciable life, and zero salvage value. The corporation is a profitable one that has a 22.98% combined incremental tax rate. At the end of 5 years the mining company changed its method of operation and sold the production machinery for $40,000. During the 5 years the machinery was used, it reduced mine operating costs by $32,000 a year, before taxes.lf the company MARR is 12% after taxes, was the investment in the machinery a satisfactory one?
Flag A mining corporation purchased $120,000 of production machinery and depreciated is using SOYD depreciation, a 5 year depreciable life, and zero salvage value. The corporation is a profitable one that has a 22.98% combined incremental tax rate. At the end of 5 years the mining company changed its method of operation and sold the production machinery for $40,000. During the 5 years the machinery was used, it reduced mine operating costs by $32,000 a year, before taxes.lf the company MARR is 12% after taxes, was the investment in the machinery a satisfactory one?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...
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