Bundle: Contemporary Financial Management, 14th + MindTap Finance, 1 term (6 months) Printed Access Card
14th Edition
ISBN: 9781337587563
Author: MOYER, R. Charles; McGuigan, James R.; Rao, Ramesh P.
Publisher: Cengage Learning
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Chapter 10, Problem 8QTD
Summary Introduction
To discuss: The impact of MACRS rules of
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- Why may it be necessary to revise the estimated life of a plant asset? When the estimated life is revised, does it affect the amount of depreciation per year? Why or why not?arrow_forwardAn intangible asset with a finite useful life should be amortized over: - a period determined by management -it is not amortized, but checked for impairment annually -not amortized at all - it is expected useful lifetimearrow_forwardWhich depreciation method ignores residual value until the last year of depreciation? Why?arrow_forward
- Indicate whether each of the following statements is true or false. Depreciation, depletion, and amortization all involve the allocation of the cost of property, plant and equipment (PPE) to expense. Answer An accelerated depreciation method is appropriate when the asset’s economic usefulness is the same each year Answer The declining-balance method does not deduct the residual value in computing the depreciation base. Answerarrow_forwardYour company could use either straight line depreciation or the 3-year MACRS accelerated depreciation method. Discuss why a firm might prefer the 3-year MACRS accelerated depreciation method over the straight line depreciation method.arrow_forwardWhen determining the best time to replace an existing asset, for what reason would you need to use marginal analysis?a. To determine what the most appropriate tax rate for the project should beb. To estimate the cost of capital for the new assetc. To determine if the defender asset should be used beyond its ESL.d. To determine the length of time the challenger asset should be used once it is placed into service.arrow_forward
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- In recording amortization of intangible asset, why isn't there an entry such as a credit to accumulated amortization? Why isn't it done the equivalent way we'd have for a fixed asset by keeping track of accumulated depreciation. Instead I notice the value of whatever the intangible asset is, is directly reduced by crediting the intangible asset When it's time to amortize. I'm guessing we could reduce the value of a fixed asset too directly. Just want to confirm that there hasn't been any recent changes to the idea of accumulated depreciation.arrow_forwardWhy this project used the straight-line depreciation method? If sinking fund method is use, is it going to be the same value, why or why not?arrow_forwardWhich of the following items is not a consideration when recording periodic depreciation on plant assets? Question 9 options: Salvage value Estimated useful life Cash needed to replace the plant asset Costarrow_forward
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