The following information pertains to the January 2, year 2 transaction replacing a print machine for Hidden Creek Enterprises, Inc.Net book value – old print machine $20,000Total cost of new machine $180,000Down payment on new machine $35,000Sale price of old machine $30,000Tax rate 30%What is the net total of relevant costs on January 2, year 2?a. $173,000b. $153,000c. $28,000d. 8,000.

Question
Asked Dec 22, 2019
1 views

The following information pertains to the January 2, year 2 transaction replacing a print machine for Hidden Creek Enterprises, Inc.
Net book value – old print machine $20,000
Total cost of new machine $180,000
Down payment on new machine $35,000
Sale price of old machine $30,000
Tax rate 30%
What is the net total of relevant costs on January 2, year 2?
a. $173,000
b. $153,000
c. $28,000
d. 8,000.

check_circle

Expert Answer

Step 1

Given:

help_outline

Image Transcriptionclose

Total cost of new machine is $180,000. Net book value of old machine is $20,000. Sale price of old machine is $30,000. Tax rate is 30%.

fullscreen
Step 2

Calculate the net total of relevant...

help_outline

Image Transcriptionclose

Calculation of profit on sale of old machine: Profit on sale of old machine = Selling price – Net book value = $30, 000 – $20, 000 $10, 000 Calculation of tax on profit on sale of old machine: = Profit on sale of old machine x Tax rate = $10,000 x 30% = $3, 000 Tax Table represents the calculation of relevant cost of new machine: Amount Particulars Total cost of new machine | 180,000 (30,000) Less: Sale price of old machine Add: Tax on profit on sale of old machine 3,000 Relevant cost of new machine 153,000 %24

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Budgeting

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: The board of directors declared cash dividends totaling $585,000 during the current year. The compar...

A: Workings: Calculate the amount of increase or decrease in dividends payable.

question_answer

Q: “JIT purchasing has many benets but also some risks.” Do you agree? Explain briey.

A: In Just-in-time (JIT) purchasing, goods and materials are purchased in a way that they are required ...

question_answer

Q: Sales mix, three products. The Ronowski Company has three product lines of belts—A, B, and C— with c...

A: 1. Company’s breakeven point in units, assuming that the given sales mix is maintained- Please see a...

question_answer

Q: What financial statement is merchandise inventory reported on, and in what section?

A: Merchandise Inventory is reported on the Balance sheet of the company under current assets section. ...

question_answer

Q: The comparative balance sheet of Navaria Inc. for December 31, 20Y3 and 20Y2, is as follows: Please ...

A: Reconcile the amount of net income with cash flows from operating activities.

question_answer

Q: Nordbock Inc. reports the following outstanding bond issue on its December 31, 20Y1,balance sheet: $...

A: Bond investment: Bond investments are debt securities which pay a fixed interest revenue to the inve...

question_answer

Q: The comparative balance sheet of Harris Industries Inc. at December 31, 20Y4 and 20Y3, is as follows...

A: Workings:

question_answer

Q: The comparative balance sheet of Navaria Inc. for December 31, 20Y3 and 20Y2, is shown as follows: P...

A: Following is the statement of cash flow:

question_answer

Q: How does accounting help the capital allocation process?

A: Capital allocation: A capital allocation is the process of allocating total capital amount into mult...