Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Chapter 7, Problem 7.3.2C
To determine
Concept Introduction:
This is one of the methods to calculate the depreciation on assets. Under this method the
Requirement-1:
To Calculate:
The Net Income for each year using the Straight Line Method
Expert Solution
Answer to Problem 7.3.2C
The Net income for each year using the Straight Line Method is as follows:
| Year | Net income |
| 20Y2 | $ 222,000 |
| 20Y3 | $ 444,000 |
| 20Y4 | $ 444,000 |
| 20Y5 | $ 444,000 |
| 20Y6 | $ 444,000 |
| 20Y7 | $ 462,000 |
Explanation of Solution
The Net Income for each year using the Straight Line Method is calculated as follows:
| Year | Income before Depreciation and Tax | Depreciation | Income before Tax | Income Tax | Net income |
| A | B | C =A-B | D=C*40% | E=C-D | |
| 20Y2 | $ 400,000 | $ 30,000 | $ 370,000 | $148,000 | $ 222,000 |
| 20Y3 | $ 800,000 | $ 60,000 | $ 740,000 | $296,000 | $ 444,000 |
| 20Y4 | $ 800,000 | $ 60,000 | $ 740,000 | $296,000 | $ 444,000 |
| 20Y5 | $ 800,000 | $ 60,000 | $ 740,000 | $296,000 | $ 444,000 |
| 20Y6 | $ 800,000 | $ 60,000 | $ 740,000 | $296,000 | $ 444,000 |
| 20Y7 | $ 800,000 | $ 30,000 | $ 770,000 | $308,000 | $ 462,000 |
To determine
Concept Introduction:
Straight line method of depreciation:
This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset it divided equally for each year f its estimated life. The formula to calculate the deprecation under straight line method is as follows:
Requirement-1:
To Calculate:
The Net Income for each year using the MCRS Method
| Year | Net income |
| 20Y2 | $ 222,000 |
| 20Y3 | $ 422,400 |
| 20Y4 | $ 445,440 |
| 20Y5 | $ 459,264 |
| 20Y6 | $ 459,264 |
| 20Y7 | $ 469,632 |
Expert Solution
Answer to Problem 7.3.2C
The Net Income for each year using the MCRS Method is as follows:
Explanation of Solution
The Net Income for each year using the MCRS Method is calculated as follows:
| Year | Income before Depreciation and Tax | Depreciation | Income before Tax | Income Tax | Net income |
| A | B | C =A-B | D=C*40% | E=C-D | |
| 20Y2 | $ 400,000 | $ 30,000 | $ 370,000 | $148,000 | $ 222,000 |
| 20Y3 | $ 800,000 | $ 96,000 | $ 704,000 | $281,600 | $ 422,400 |
| 20Y4 | $ 800,000 | $ 57,600 | $ 742,400 | $296,960 | $ 445,440 |
| 20Y5 | $ 800,000 | $ 34,560 | $ 765,440 | $306,176 | $ 459,264 |
| 20Y6 | $ 800,000 | $ 34,560 | $ 765,440 | $306,176 | $ 459,264 |
| 20Y7 | $ 800,000 | $ 17,280 | $ 782,720 | $313,088 | $ 469,632 |
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Chapter 7 Solutions
Survey of Accounting (Accounting I)
Ch. 7 - Which of the following expenditures incurred in...Ch. 7 - What is the amount of depreciation, using the...Ch. 7 - An example of an accelerated depreciation method...Ch. 7 - Prob. 4SEQCh. 7 - Prob. 5SEQCh. 7 - Which of the following qualities are...Ch. 7 - Prob. 2CDQCh. 7 - Prob. 3CDQCh. 7 - Prob. 4CDQCh. 7 - Are the amounts at which fixed assets are reported...
Ch. 7 - a. Does the recognition of depreciation in the...Ch. 7 - Backyard Company purchased a machine that has a...Ch. 7 - Is it necessary for a business to use the same...Ch. 7 - Prob. 9CDQCh. 7 - Prob. 10CDQCh. 7 - Prob. 11CDQCh. 7 - Prob. 12CDQCh. 7 - Prob. 13CDQCh. 7 - Prob. 14CDQCh. 7 - Prob. 15CDQCh. 7 - Costs of acquiring fixed assets Summer Wilks owns...Ch. 7 - Determine cost of land Snowy Ridges Ski Co. has...Ch. 7 - Determine cost of land Four Corners Delivery...Ch. 7 - Nature of depreciation Custer Construction Co....Ch. 7 - Straight-line depreciation rates Convert each of...Ch. 7 - Straight-line depreciation A refrigerator used by...Ch. 7 - Depreciation by two methods A Caterpillar tractor...Ch. 7 - Depreciation by two methods Equipment acquired at...Ch. 7 - Partial-year depreciation Sandblasting equipment...Ch. 7 - Capital and revenue expenditures About Time...Ch. 7 - Capital and revenue expenditures Dehra Bundy owns...Ch. 7 - Prob. 7.12ECh. 7 - Sale of asset Equipment acquired on January 9,...Ch. 7 - Disposal of fixed asset Equipment acquired on...Ch. 7 - Recording depletion MacLean Mining Co. acquired...Ch. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Book value of fixed assets Apple. Inc., designs,...Ch. 7 - Balance sheet presentation List the errors you...Ch. 7 - Prob. 7.1.1PCh. 7 - Allocate payments and receipts to fixed asset...Ch. 7 - Prob. 7.1.3PCh. 7 - Compare three depreciation methods Bayside...Ch. 7 - Depreciation by two methods; partial years Knife...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Amortization and depletion entries Data related to...Ch. 7 - Prob. 7.5.2PCh. 7 - Prob. 7.1MBACh. 7 - Prob. 7.2.1MBACh. 7 - Prob. 7.2.2MBACh. 7 - Prob. 7.3.1MBACh. 7 - Prob. 7.3.2MBACh. 7 - Prob. 7.3.3MBACh. 7 - Prob. 7.3.4MBACh. 7 - Prob. 7.4MBACh. 7 - Prob. 7.5.1MBACh. 7 - Asset turnover United Continental Holdings. Inc.,...Ch. 7 - Prob. 7.6.1MBACh. 7 - Prob. 7.6.2MBACh. 7 - Prob. 7.7.1MBACh. 7 - Prob. 7.7.2MBACh. 7 - Prob. 7.8.1MBACh. 7 - Prob. 7.8.2MBACh. 7 - Prob. 7.9.1MBACh. 7 - Prob. 7.9.2MBACh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3.1CCh. 7 - Prob. 7.3.2CCh. 7 - Effect of depreciation on net income Einstein...Ch. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.6C
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