MalMax purchased a depreciable asset. What would be the difference in total assets at the end of the first year if MalMax chooses straight-line depreciation versus double-declining-balance depreciation?
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MalMax purchased a
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- Identify the depreciation method used for Double-declining-balance depreciation?Compare the different depreciation methods.? Give an example of how companies depreciate their plant assets under each method?You are building guest huts at a holiday resort, and you need to choose whether to build your huts out of straw, wood, or brick. Straw is the cheapest but depreciates the most quickly; brick is the most expensive but depreciates least; wood is intermediate. Assume that all types of huts are equally picturesque/functional. They differ only in terms of durability. The cost (and depreciation rates) of the different hut types is: - Brick: £3,500 (10% depreciation) - Wood: £3,000 (15% depreciation) - Straw: £2,500 (20% depreciation) a) The interest rate is 5%, which type of hut should you buy? b) The interest rate is 20%, which type of hut should you buy? c) Intuitively, why were the answers for parts (a) and (b) different? Explain in words.
- ABC Company makes its policy that for every new piece of equipment purchased, the annual depreciation should not exceed 25% of the first cost at any time without salvage value. determine the length of service if the depreciation used is the Double Declining Balanced method.Assume that a piece of equipment cost $5,000 and had accumulated depreciation of $3,000. What is the book value of the equipment? Is the book value equal to the fair market value of the equipment? Explain.A builder paid $120,000 for a house and lot. The value of the land was appraised at $65,000, and the value of the house at $55,000. The house was then torn down at an additional cost of $8,000 so that a warehouse could be built on the lot at a cost of $50,000. What is the total value of the property with the warehouse? For depreciation purposes, what is the cost basis for the warehouse?
- ABC Corporation makes its policy that for every new equipment purchased, the annual depreciation should not exceed 20% of the first cost at any time without salvage value. Determine the length of service if the depreciation used is the SOYD Method.A manufacturing company makes it a policy that for every new equipment purchased, the annual depreciation cost should not exceed 25% of the first cost at any time without salvage value. Determine the length of serviceConcepcion Industries paid $308,000 in federal taxes last year. If business expenses and depreciation charges were $345,000, what were their gross sales for the year?
- In Straight Line depreciation, the book value at the end of the depreciable life is equal to the salvage value used to calculate the yearly depreciation amount. TRUE OR FALSEDoes the inclusion of a depreciation expense reflect the true cost of doing business?A printing machine initially costs ₱169,000. It can be sold for ₱15,000 at the end of its 12-year useful life.Using the double declining balance method, what is the depreciation charge of the machine at the end of the second year of its useful life?