Question
In: Accounting
The cost of an equipment is $300,000 and falls in asset Class 9 for CCA deprecation...
The cost of an equipment is $300,000 and falls in asset Class 9 for CCA deprecation purpose. The depreciation rate of Class 9 assets is 25%. You intend to sell the equipment in 5 years for a salvage value of $40,000. At the time of sale, you still anticipate having other assets in the give asset class. Your tax rate is 35% and your discount rate is 14%. What is the present values of CCA tax shield?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
A proposed cost-saving device has an installed cost of $720,000. It is in Class 8 (CCA...
A proposed cost-saving device has an installed cost of $720,000.
It is in Class 8 (CCA rate = 20%) for CCA purposes. It will
actually function for five years, at which time it will have no
value. There are no working capital consequences from the
investment, and the tax rate is 35%.
a. What must the pre-tax cost savings be for us to
favour the investment? We require an 12% return. (Hint: This one is
a variation on the problem...
A proposed cost-saving device has an installed cost of $640,000. It is in Class 8 (CCA...
A proposed cost-saving device has an installed cost of $640,000.
It is in Class 8 (CCA rate = 20%) for CCA purposes. It will
actually function for five years, at which time it will have no
value. There are no working capital consequences from the
investment, and the tax rate is 35%.
a. What must the pre-tax cost savings be for us to
favour the investment? We require an 10% return. (Hint: This one is
a variation on the problem...
Sale of Asset Equipment acquired on January 9, 20Y3, at a cost of $475,000, has an...
Sale of Asset
Equipment acquired on January 9, 20Y3, at a cost of $475,000,
has an estimated useful life of 15 years, an estimated residual
value of $85,500, and is depreciated by the straight-line
method.
a. What was the book value of the equipment at
the end of the fifth year, December 31, 20Y7? Round your interim
calculations and final answer to the nearest dollar.
$
For decreases in accounts or outflows of cash, enter your
answers as negative numbers....
1. In 2018, ABC Corporation purchased a new photocopier (asset class 8) with a CCA rate...
1. In 2018, ABC Corporation purchased a new photocopier
(asset class 8) with a CCA rate of 20% for $5,000, as well as a new
truck (asset class 10) with a CCA rate of 30% for $40,000.
Calculate the total CCA for ABC Corporation for each of
the first three years. Show your
calculations.
2. ABC Corporation is a large retailer that has many stores in
Canada. Each location has a store manager who receives a fixed
salary regardless of...
1. In 2018, ABC Corporation purchased a new photocopier (asset class 8) with a CCA rate...
1. In 2018, ABC Corporation purchased a new photocopier
(asset class 8) with a CCA rate of 20% for $5,000, as well as a new
truck (asset class 10) with a CCA rate of 30% for $40,000.
* Calculate total CCA for ABC Corporation for each of
the first 3 years.( SHOW ALL CALCULATIONS)
A company is purchasing a new equipment in Class 8 (20% CCA rate -- declining balance...
A company is purchasing a new equipment in Class 8 (20% CCA rate
-- declining balance class, half year rule applicable) in 2019 for
$33,000.
The machine is expected to result in annual revenue of $16,000
for each of the next five years and will be sold at the end of that
time for an expected salvage value of $13,000.
Maintenance expenses are expected to be $1,400 for the first
year and to increase by $200 per year for each...
You have purchased $320,000 of computer equipment that is in a CCA Class 10 (Canada Revenue...
You have purchased $320,000 of computer equipment that is in a
CCA Class 10 (Canada Revenue Agency). Using the half-in-first-year
rule, how much depreciation would occur in year 3?
An asset used in a four-year project falls in the five-year MACRS class for tax purposes....
An asset used in a four-year project falls in the five-year
MACRS class for tax purposes. The asset has an acquisition cost of
$6,050,000 and will be sold for $1,250,000 at the end of the
project. If the tax rate is 25 percent, what is the aftertax
salvage value of the asset? Refer to Table 8.3. (Do not
round intermediate calculations and enter your answer in dollars,
not millions of dollars, rounded to 2 decimal places, e.g.,
1,234,567.89.)
An asset used in a four-year project falls in the five-year MACRS class for tax purposes....
An asset used in a four-year project falls in the five-year
MACRS class for tax purposes. The asset has an acquisition cost of
$4,750,000 and will be sold for $1,375,000 at the end of the
project. If the tax rate is 24 percent, what is the aftertax
salvage value of the asset? Refer to Table 10.7. (Do not
round intermediate calculations and enter your answer in dollars,
not millions of dollars, e.g., 1,234,567.)
What is the:
After-tax salvage value:
An asset used in a 4-year project falls in the 5-year MACRS class (refer to MACRS...
An asset used in a 4-year project falls in the 5-year MACRS
class (refer to MACRS table on page 277), for tax purposes. The
asset has an acquisition cost of $16,517,578 and will be sold for
$7,378,085 at the end of the project. If the tax rate is 0.28, what
is the aftertax salvage value of the asset ?
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