3. A firm purchased and put in service a new piece to manufacture reusable rockets. The...

3. A firm purchased and put in service a new piece to manufacture reusable rockets. The cost basis for the equipment is $250,000. Tabulate annual depreciation deductions and book values for each year using GDS method. Class life = 10. GDS^b = 7. ADS = 10.

Solutions

Expert Solution

Year	Cost basis	Rate	Depreciation for the year	Opening book value	Depreciation expense	Closing book value
1	250,000	14.29%	35,725.00	250,000.00	35,725.00	214,275.00
2	250,000	24.49%	61,225.00	214,275.00	61,225.00	153,050.00
3	250,000	17.49%	43,725.00	153,050.00	43,725.00	109,325.00
4	250,000	12.49%	31,225.00	109,325.00	31,225.00	78,100.00
5	250,000	8.93%	22,325.00	78,100.00	22,325.00	55,775.00
6	250,000	8.92%	22,300.00	55,775.00	22,300.00	33,475.00
7	250,000	8.93%	22,325.00	33,475.00	22,325.00	11,150.00
8	250,000	4.46%	11,150.00	11,150.00	11,150.00	-

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

. A taxpayer purchased and placed in service during the year a $100,000 piece of equipment....

. A taxpayer purchased and placed in service during the year a $100,000 piece of equipment. The equipment is 7-year property. The first-year depreciation for 7-year property is 14.29%. There is an allowable Section 179 limit in the current year of $25,000. What amount is the maximum allowable depreciation?

Laverne purchased a new piece of equipment to be used in its new facility. The $385,000...

Laverne purchased a new piece of equipment to be used in its new facility. The $385,000 piece of equipment was purchased with a $57,750 down payment and with cash received through the issuance of a $327,250, 7%, 5-year mortgage payable issued on January 1, 2017. The terms provide for annual installment payments of $79,813 on December 31. Prepare an installment payments schedule for the first five payments of the notes payable. Prepare the journal entry to record the mortgage loan...

Your company just bought a new piece of equipment to manufacture widgets. It has a cost...

Your company just bought a new piece of equipment to manufacture widgets. It has a cost basis of $275,000, a useful life of 13 years, and no salvage value. If the asset is depreciated using a 150% declining balance with straight line switchover method, answer the following questions: a) How much does the value depreciate in Year 1? b) How much does the value depreciate in Year 2? c) What is the book value at the end of Year 4?...

Your company just bought a new piece of equipment to manufacture widgets. It has a cost...

Your company just bought a new piece of equipment to manufacture widgets. It has a cost basis of $33,000, a useful life of 13 years, and no salvage value. If the asset is depreciated using a 200% declining balance with straight line switchover method, answer the following questions: a) How much does the value depreciate in Year 1? b) How much does the value depreciate in Year 2? c) What is the book value at the end of Year 4?...

At the beginning of 20X1, Monterey Company purchased a new piece of equipment at a cost...

At the beginning of 20X1, Monterey Company purchased a new piece of equipment at a cost of $50,000. The equipment was expected to have a ten-year life and no salvage value. Unfortunately, the bookkeeper at Monterey erroneously recorded the purchase of the equipment with a debit to maintenance expense. This error was not discovered until the 20X6. The company had planned to use the Straight-line method of depreciation for both financial statement and tax reporting purposes. The company is in...

A new piece of Machinery was purchased for $200,000. The machinery has an economic life of...

A new piece of Machinery was purchased for $200,000. The machinery has an economic life of 4 years and falls under Class 8 with a CCA of 20%. The machinery is expected to have a salvage value of $25,000 after 4 years of use. The firms tax rate is 28%, and its overall WACC is 10%. Using the declining balance method, calculate the PV of the CCA tax shield.

A firm is planning to manufacture a new product. The sales department estimates that the quantity...

A firm is planning to manufacture a new product. The sales department estimates that the quantity that can be sold depends on the selling price. As the selling price is increased, the quantity that can be sold decreases. On the other hand, the management estimates that the average cost of manufacturing and selling the product will decrease as the quantity sold increases. Numerically they estimate: P = $35.00–0.02Q C = $4.00Q + $8000 P = selling price per unit Q...

1. A piece of equipment was purchased new at $35,000. The salvage value is $1500 after...

1. A piece of equipment was purchased new at $35,000. The salvage value is $1500 after its 8 year service life. Determine the depreciation and blue book value for the life of the asset, assuming: a) straight line depreciation b) MACRS (use 5 yr table) c) SOYD method d) DDB method

3. A clothing designer purchased a piece of assembly equipment costing $32,000, and they paid in...

3. A clothing designer purchased a piece of assembly equipment costing $32,000, and they paid in cash. It also cost $2,200 to transport the equipment, $3,000 in taxes for the equipment, and $4,400 for workers to install the equipment in the factory. What amount should the clothing designer record the equipment at on the balance sheet? Please show all account names and steps.

A company is considering a $100,000 piece of equipment after securing a 3 year service contract....

A company is considering a $100,000 piece of equipment after securing a 3 year service contract. This equipment falls into the MACRS five year class and will be sold after three years for $42,000. The addition of this equipment will have no effect on revenues, but it is expected to save the company $45,000 per year in before-tax operating costs. The firm's marginal tax rate (federal plus state) is 40%, and its after-tax MARR is 12%. Show if this investment...

Subjects