FUNDAMENTAL ACCT PRIN CONNECT ACCESS
25th Edition
ISBN: 9781265592455
Author: Wild
Publisher: MCG
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Chapter 10, Problem 9E
Exercise 10-9
Straight-line
P1
Tory Enterprises pays $238,400 for equipment that will last five years and have a $43,600 salvage value. By using the equipment in its operations for five years, the company expects to earn $88,500 annually, after deducting all expenses except depreciation.
Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming straight-line depreciation.
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MC algo 9-6 Calculating Salvage Value A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,100,000 and can be sold for $675,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 23 percent. What is the aftertax salvage value of the equipment? Multiple Choice $519,750 $560,819 $707,044 $675,000 $642,956
Exercise 10-24
On December 31, 2020, Vaughn Inc. has a machine with a book value of $1,353,600. The original cost and related accumulated depreciation at this date are as follows.
Machine
$1,872,000
Less: Accumulated depreciation
518,400
Book value
$1,353,600
Depreciation is computed at $86,400 per year on a straight-line basis.Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal.
Your answer is partially correct. Try again.
A fire completely destroys the machine on August 31, 2021. An insurance settlement of $619,200 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If…
Exercise 9-12 Income statement effects of alternative depreciation methods LO2 Kenartha Oil recently paid $489,900 for equipment that will last five years and have a residual value of $118,000. By using the machine in its operations for five years, the company expects to earn $184,000 annually, after deducting all expenses except depreciation. Complete the schedule below assuming each of (a) straight-line depreciation and (b) double-declining- balance depreciation. (Do not round intermediate calculations. Enter loss amounts with a minus sign.) (a) Straight-Line Depreciation: Profit before depreciation Depreciation expenses Profit (loss) (b) Double-Declining-Balance Depreciation: Profit before depreciation Depreciation expenses Year 1 Year 1 < Prev Year 2 Year 2 4 of 10 Year 3 Year 3 Next > Year 4 Year 4 Year 5 Year 5 5-Year Totals 5-Year Totals
Chapter 10 Solutions
FUNDAMENTAL ACCT PRIN CONNECT ACCESS
Ch. 10 - Cost of plant assets C1 Kegler Bowling installs...Ch. 10 - Assigning costs to plant assets C1 Q Listed below...Ch. 10 - Prob. 3QSCh. 10 - Straight-line depreciation P1 On January 1= the...Ch. 10 - QS 10-' Units-of-production depreciation
On...Ch. 10 - QS10-5 Double-declining-balance method P1
A...Ch. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Prob. 9QSCh. 10 - Prob. 10QS
Ch. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 16QSCh. 10 - Prob. 17QSCh. 10 - Prob. 18QSCh. 10 - Prob. 19QSCh. 10 - Prob. 20QSCh. 10 - Prob. 21QSCh. 10 - Prob. 22QSCh. 10 - Exercise 10-1 Cost of plant assets C1 Q Rizio Co....Ch. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Exercise 104 Straight-line depreciation P1 Ramirez...Ch. 10 - Exercise 10-5 Units-of-production depreciation P1...Ch. 10 - Exercise 10-6
Double-declining-balance...Ch. 10 - Exercise 10-7 Straight-line depreciation P1
New...Ch. 10 - Exercise 10-8 Double-declining-balance...Ch. 10 - Exercise 10-9 Straight-line depreciation and...Ch. 10 - Exercise 10-10
Double-declining-balance...Ch. 10 - Exercise 10-11 Straight-line, partial-year...Ch. 10 - Exercise 10-12 Dauble-declining-balance....Ch. 10 - Exercise 10-13
Revising depreciation
C2
Apex...Ch. 10 - Exercise 10-14 Ordinary repairs, extraordinary...Ch. 10 - Exercise 10.15 Extraordinary repairs; plant asset...Ch. 10 - Exercise 10-16 Disposal of assets P2 Diaz Company...Ch. 10 - Exercise 10-17 Partial-year depreciation: disposal...Ch. 10 - Exercise 10-18 Depletion of natural resources P3...Ch. 10 - Exercise 10-19 Amortization of intangible assets...Ch. 10 - Exercise 10-20 Goodwill P4 Robinson Company...Ch. 10 - Exercise 10-21 Preparing a balance sheet P1 P3...Ch. 10 - Exercise 10-22 Evaluating efficient use of assets...Ch. 10 - Exercise 10-23A Exchanging assets P5
Gilly...Ch. 10 - Prob. 24ECh. 10 - Prob. 25ECh. 10 - Prob. 26ECh. 10 - Problem 10-1A Plant asset costs; depreciation...Ch. 10 - Problem 1O-2A Depreciation methods P1 A machine...Ch. 10 - Problem 10-3A Asset cost allocation; straight-line...Ch. 10 - Problem 10-4A
Computing and revising depreciation;...Ch. 10 - Problem 10-5A Computing and revising depreciation;...Ch. 10 - Problem 1O-6A
Disposal of plant assets
C1 P1...Ch. 10 - Problem 1O7A
Natural resources
P3
On July 23 of...Ch. 10 - Problem 10-1B Plant asset costs; depreciation...Ch. 10 - Problem 10-28 Depreciation methods P1 On January...Ch. 10 - Problem 10-3B Asset cost allocation; straight-line...Ch. 10 - Prob. 4PSBCh. 10 - Problem 10-5B Computing and revising...Ch. 10 - Problem 1O-6B
Disposal of plant assets
C1 P1 P2
On...Ch. 10 - Prob. 7PSBCh. 10 - Prob. 10SPCh. 10 - Prob. 1AACh. 10 - Prob. 2AACh. 10 - Prob. 3AACh. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQCh. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 16DQCh. 10 - Prob. 1BTNCh. 10 - Prob. 2BTNCh. 10 - Prob. 3BTNCh. 10 - Prob. 4BTN
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- Exercise 14. Revision of depreciation A warehouse with a cost of P500,000 has an estimated residual value of P20,000, an estimated useful life of 40 years and is depreciated by the straight line method. (a) What is the amount of the annual depreciation? (b) What is the book value at the end of the twentieth year of use? (c) If at the start of the twenty-first year it is estimated that the remaining life is 15 years and that the residual value is P5,000, what is the depreciation expense for each of the remaining 15 years? Exercise 15. Adjusting entries for depreciation; effect of error On December 31, a business estimates depreciation on equipment used during the first year of operations to be P8,500. If the adjusting entry were omitted, which items would be erroneously stated on (1) the SCI for the year and (2) the SFP as of December 31?arrow_forwardExercise 14. Revision of depreciation ( A warehouse with a cost of P500,000 has an estimated residual value of P20,000, an estimated useful life of 40 years and is depreciated by the straight line method. (a) What is the amount of the annual depreciation? (b) What is the book value at the end of the twentieth year of use? (c) If at the start of the twenty-first year it is estimated that the remaining life is 15 years and that the residual value is P5,000, what is the depreciation expense for each of the remaining 15 years?arrow_forwardProblem 6-10 Calculating Salvage Value An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. The asset has an acquisition cost of $8,900,000 and will be sold for $2,440,000 at the end of the project. If the tax rate is 23 percent, what is the aftertax salvage value of the asset? (MACRS schedule) (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Aftertax salvage value $ 2,232,149arrow_forward
- Tory Enterprises pays $239,400 for equipment that will last five years and have a $43,700 salvage value. By using the equipment in its operations for five years, the company expects to earn $88,600 annually, after deducting all expenses except depreciation. Exercise 8-10 Double-declining-balance depreciation LO P1 Calculate annual depreciation expenses using double-declining-balance method.Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming double-declining-balance depreciation.arrow_forwardProblem 9-07 A firm has earnings of $25,000 before interest, depreciation, and taxes. A new piece of equipment is installed at a cost of $13,000. The equipment will be depreciated over five years, and the firm pays 15 percent of its earnings in taxes. What are the earnings and cash flows for the firm in years 2 and 5, using the two methods of depreciation? Use Exhibit 9.4to answer the questions. Round your answers to the nearest dollar. Modified Accelerated Straight-line Cost Recovery Year 2 Year 5 Year 2 Year 5 Earnings before depreciation and taxes $ $ $ $ Depreciation expense Earnings after depreciation Taxes (15% tax rate) Net earnings $ $ $ $ Cash flow $ $ $ $arrow_forwardExercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1 A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $26,000. Income Year 1 $8,800 Year 2 $21,800 Year 3 $57,000 Year 4 $32,900 Year 5 $87,200 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) × Answer is complete but not entirely correct. Year Net Income Depreciation Net Cash Flow Cumulative Net Cash Flow Initial invest $ (130,000) $ (130,000) Year 1 $ 8,800 $ 26,000 34,800 34,800 x Year 2 21,800 26,000 47,800 82,600 × Year 3 57,000 26,000 83,000 130,000 ☑ Year 4 32,900 26,000 Year 5 87,200 26,000 Payback period = 2.57 yearsarrow_forward
- Problem #1 Assumptions: ABC Machine Corp. buys a specialty lathe for its metal products with an original equipment purchase price of $27,850. The lathe has an estimated economic life of six (6) years and an assumed salvage value of $1,390. Expected production over economic life of the lathe is 126,000 units in the following pattern: Yr 1 = 15,000 units; Yrs 2-6 = 22,200 units per year Calculate annual depreciation for the specialty lathe, using each of the four depreciation methods: Year 1 Year 3 Year 4 Method Straight line Units of production Sum-of-years'-digits Double declining balance Year 2 Year 5 Year 6 Totalsarrow_forwardQUESTION 32 Vaughn Company purchases equipment on January 1, Year 1, at a cost of $518,000. The asset is expected to have a service life of 12 years and a salvage value of $50,000. Instructions (a) Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. (b) Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years’- digits method. (c) Compute the amount of depreciation for each of Years 1 through 3 using the double-declining balance method. (In performing your calculations, round constant percentage to the nearest one hundredth of a point and round answers to the nearest dollar.)arrow_forwardMACRS Year 0 Depreciation Rate 33.33% $55,998 $79,608 $57,962 A machine is purchased for $850,000 and is used through the end of Year 2. The machine will be depreciated using the 3-Year MACRS schedule in the table above. At the end of Year 2, the machine is sold for $75,000. What is the after-tax cash flow from the sale of the machine at the end of Year 2 if the firm's marginal tax rate is 35%? $62,985 $75,000 Project Year Year 1 44.45% $70,795 Year 2 14.81% Year 3 7.41%arrow_forward
- QUESTION 9 Amotor vehicle which cost £30,000 is depreciated at 20% per annum using the reducing balance method. The depreciation charge for the second year would be: a. £13,800 b.E8,000 c. £4,800 24,000x20%=£4,800 d.£7,200arrow_forward11-23 images A profitable company making earthmoving equipment is considering an investment of $150,000 on equipment that will have a 5-year useful life and a $50,000 salvage value. Use a spreadsheet to compute the 60% bonus depreciation with the MACRS depreciation schedule. Show the total depreciation taken (=sum()) as well as the PW of the depreciation charges discounted at 10%.arrow_forwardQuestion 27 Southern Inc. purchases an asset for $184,000. This asset qualifies as a 3-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 33.33%, year 2 = 44.45%, year 3 = 14.81%, and year 4 = 7.41%. Southern has a tax rate of 20%. If the asset is sold at the end of 3 years for $40,000, what is the cash flow from disposal? $54,261 $43,409 O $84,782 $67,826 $34,727 Question 27 ofarrow_forward
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