Mr Moosa has took a laptop (Which costs OMR 350) for lease from Mr Fahad for 11 months period. As Mr Moosa is expecting new technological production machineries in the Market in coming 4 to 5 years, he does not wants to buy a new machinery. Therefore he planned to take a machinery (Worth of OMR 5000) from Mr Talal on lease for the period of 5Yeras. Which of the above assets can be capitalized? Choose the correct answer from the following given options. a. Laptop b. Machinery C. Both Laptop and Machinery d. None of the given options

Mr Moosa has took a laptop (Which costs OMR 350) for lease from Mr Fahad for 11 months period. As Mr Moosa is expecting new technological production machineries in the Market in coming 4 to 5 years, he does not wants to buy a new machinery. Therefore he planned to take a machinery (Worth of OMR 5000) from Mr Talal on lease for the period of 5Yeras. Which of the above assets can be capitalized? Choose the correct answer from the following given options. a. Laptop b. Machinery C. Both Laptop and Machinery d. None of the given options

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 50P

See similar textbooks

Similar questions

Mr. XYZ is an entrepreneur who is contemplating to buy a machine to increase the capacity of his manufacturing operations, He consults you for advise on the alternatives of leasing or buying the equipment. If purchased, the straight line depreciation expense will be P 18,700 annually over its life of 5 years. The annual lease payments will amount to P 29,000 payable at the beginning of each of the 5 years. Cost of money is 18%. Tax rate is 35%. There is no salvage value. Present value of P 1 received annually for 5 years at 18% is 3,127. Present value of P1 due in 5 years at 18% is .437. The amount of annual lease payment wherein Mr. XYZ will be indifferent between buying and leasing the machine is?
XYZ Builders Ltd needs to acquire the use of a crane for their construction business and are considering buying or leasing a crane. The crane costs Rs. 10,00,000, and is subject to the straight-line method of depreciation to a zero salvage value at the end of 5 years. In contrast, the lease rent is Rs. 2,20,000 per year to be paid in advance each year for 5 years. XYZ Builders Ltd can raise debt at 14 percent payable in equal annual installments, each installment due at the beginning of the year. The company is in the 50 percent tax bracket. Should the XYZ lease or buy the crane?
Mr Anderson, a pharmacist and the owner of a block of flats located at Twabidi, a first class residential area in Accra anticipates that he will need to provide a new stair case in 8 years’ time at an estimated cost of ¢7,500,000. If capital can be invested at 9.52% per annum, what amount should be invested to meet the future liability?
Carol has a closed-end lease agreement in which the lessor has estimated that the value of the leased car will be $10,000 at the end of the lease term. If Carol returns the car in good condition and under the mileage limit at the end of the lease, but the car is then worth only $9,000, Carol will A : not get her security deposit back as a penalty. B : have to pay the extra $1,000 in depreciation at that time. C : be able to walk away without any responsibility for the extra loss in value. D : receive a rebate of $1,000 from the lessor.
XYZ Builders Ltd. need to acquire the use of a crane for their construction business and are considering buying or leasing a crane. The crane costs Rs.1000 subject to SLM depreciation with salvage value 0 at the end of 5 years. In contrast, the lease rent is Rs.3000 p.a. to be paid in advance each year for 5 years.XYZ Builders ltd can raise debt at 20% payable in equal annual instalments, each instalment due at the beginning of the year. Tax applicable in 35%. Should it lease or buy the asset?
Leroy purchased an AI-based robotics system with the first cost of $345,000, an AOC of $148,000 per year, a $140,000 salvage value, and an ESL of 3 years. Rather than trading after 3 years, he kept the system for a total of 5 years. Due to the wear factor and expense of repairs, its AOC increased to $280,000 per year starting in year 4, plus the salvage value went to zero. At i = 10% per year, what is the percentage increase in the AW of costs that Leroy experienced? The percentage increase in the AW of costs that Leroy experienced is __ %
Anna owns an investment property in Sai Kung for many years which has been rented out at $30,000 per month. She holds a non refundable rental deposit of $90,000. In the year of assessment 2023/24, she was able to collect rent for the first three months only. She finally repossessed the property and rented the property on 1 February 2024 at a new rent of $20,000 per month. Rates and management fees paid by Anna during the year was $36,000 and $24,000 respectively. What is the net assessable value for property tax purposes for the year of assessment 2023/24?Question 21Select one: a. $192,000 b. $144,000
According to the Building Residual Technique, the annual operating income of the building is $26,400. How much money should he be willing to pay when he wants to buy this building over its 30-year economic life, using the plot of land at $75,000 and an interest rate of 11%?
Kohlers Inc. is considering a leasing arrangement to finance some manufacturing tools that it needs for the next three years. The tools will be obsolete and worthless after three years. The firm will depreciate the cost of the tools over their three-year MACRS class life (.33, .45, .15, .07). Kohlers can borrow $4,800,000, the purchase price, at 10% and buy the tools, or it can make three equal, end-of-the-year payments of $2,100,000 each and lease them. The loan is a 3-year simple interest loan, with interest paid at the end of each year. The firm's tax rate is 40%. Annual maintenance costs associated with ownership are estimated at $240,000, but this cost would be covered by the lessor if Kohler leases. What is the net advantage to leasing (NAL), in thousands? (drop three zero's in your calculations.)
Julia currently is considering the purchase of some land to be held as an investment. She and the seller have agreed on a contract under which Julia would pay $1,000 per month for 60 months, or $60,000 total. The seller, not in the real estate business, acquired the land several years ago by paying $10,000 in cash. Two alternative interpretations of this transaction are (1) a price of $51,726 with 6 percent interest and (2) a price of $39,380 with 18 percent interest. Which interpretation would you expect each party to prefer? Why?
Freal is a commercial real estate developer. It is interested in acquiring land to build a shopping centre. The cost associated with land acquisition and construction is estimated to be $60 million. There are two options available to Freal: A Leaseoption where the company sells the property in year 1 and undertakes a leaseback for two more years; A Saleoption where the company sells the property at the end of year 3. The cash flows for the lease or sale option are: Year Lease ($ million) Sale ($ million) 1 60 12 2 9 12 3 9 67 Assume a required rate of return of ten percent per annum. Calculate both NPV and IRR for the Lease option & the Sale option. Which is the preferred option? Please explain The directors of Freal would like to know the incremental IRR to help them with their decision. Calculate the incremental IRR and explain which option you should choose based on the incremental IRR. Assume that with the addition of an outlay of $1…
Your client, Keith Bridgeport Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Bridgeport has an investment cost of $428,800 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 12% return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables You are requested to provide Bridgeport with the amount of each of the 25 rental payments that will yield an 12% return on