Question

In: Finance

A tractor for over-the-road hauling is purchased for $90,000. It is expected to be of use...

A tractor for over-the-road hauling is purchased for $90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Calculate the depreciation deduction and the unrecovered investment during each year of the tractor's life. Use double declining balance switching to straight line depreciation. Please show excel equations if excel is used!

Solutions

Expert Solution

Double declining depreciation rate = 2 /useful life

                                  = 2/6

                                  = .3333333 or 33.33333%

Depreciation expense End of year values
Carrying value Rate Depreciation expense Accumulated depreciation Carrying value
1 90000 33.33333% 30000 30000 90000-30000=60000
2 60000 33.33333%` 20000 30000+20000=50000 60000-20000=40000
3 40000 33.333333% 13333 50000+13333= 63333 40000-13333= 26667
4 26667 33.333333%` 8889 63333+8889 = 72222 26667-8889= 17778
5 17778 33.333333% 5926 72222+5926= 78148 17778-5926=11852
6 11852 33.33333% 3951 78148+3951= 82099 7901

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

A tractor for over-the-road hauling is to be purchased by AgriGrow for $90,000. It is expected...
A tractor for over-the-road hauling is to be purchased by AgriGrow for $90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Transportation cost savings are expected to be $170,000 per year; however, the cost of drivers is expected to be $70,000 per year, and operating expenses are expected to be $63,000 per year, including fuel, maintenance, insurance, and the like. The company’s marginal tax rate is 40...
A tractor for over-the-road hauling is purchased for $80,000.00. It is expected to be of use...
A tractor for over-the-road hauling is purchased for $80,000.00. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,600.00. Calculate the depreciation deduction and the unrecovered investment during each year of the tractors life. a. Use straight-line depreciation. Provide depreciation and book value for year 6. Depreciation for year 6 =? $ book value for year 6 =? $ b. Use declining-balance depreciation, with a rate that ensures the...
A tractor for over-the-road hauling is purchased for $75,000.00. It is expected to be of use...
A tractor for over-the-road hauling is purchased for $75,000.00. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,200.00. Calculate the depreciation deduction and the unrecovered investment during each year of the tractors life. a. Use straight-line depreciation. Provide depreciation and book value for year 6. b. Use declining-balance depreciation, with a rate that ensures the book value equals the salvage value. Provide depreciation and book value for year...
A tractor for over-the-road hauling is to be purchased by AgriGrow for $78,000. It is expected...
A tractor for over-the-road hauling is to be purchased by AgriGrow for $78,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,200. Transportation cost savings are expected to be $130,000 per year; however, the cost of drivers is expected to be $50,000 per year, and operating expenses are expected to be $35,000 per year, including fuel, maintenance, insurance, and the like. The company’s marginal tax rate is 25...
A tractor for over-the-road hauling is to be purchased by AgriGrow for $80,000. It is expected...
A tractor for over-the-road hauling is to be purchased by AgriGrow for $80,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,800. Transportation cost savings are expected to be $140,000 per year; however, the cost of drivers is expected to be $53,000 per year, and operating expenses are expected to be $47,000 per year, including fuel, maintenance, insurance, and the like. The company’s marginal tax rate is 25...
Your company has purchased a large new truck-tractor for over the road use. It has a...
Your company has purchased a large new truck-tractor for over the road use. It has a cost basis of $209,697. Its MV at the end of 18 years is estimated as $1,271. Assume it will be depreciated using DDB method and the depreciation period is 18 years. What is the depreciation payment in year 4?
A construction company is purchasing a new Tractor for over the road use. The IRS classifies...
A construction company is purchasing a new Tractor for over the road use. The IRS classifies this as 3-year property. The truck costs $347000. a) Determine the depreciation allowance for each year using SLN method. b) Determine the depreciation allowance for each year using DDB method. c) Determine the depreciation allowance for each year using MACRS. d) Using a 10% MARR calculate the present worth of the depreciation for each of the 3 methods above.
A construction company is purchasing a new Tractor for over the road use. The IRS classifies...
A construction company is purchasing a new Tractor for over the road use. The IRS classifies this as 3-year property. The truck costs $297000. a) Determine the depreciation allowance for each year using SLN method. Year 1 $   Year 2 $   Year 3 $   Year 4 $   b) Determine the depreciation allowance for each year using DDB method. Year 1 $   Year 2 $   Year 3 $   Year 4 $   c) Determine the depreciation allowance for each year using MACRS....
A construction company is purchasing a new Tractor for over the road use. The IRS classifies...
A construction company is purchasing a new Tractor for over the road use. The IRS classifies this as 3-year property. The truck costs $280000. a) Determine the depreciation allowance for each year using SLN method. Year 1 $ Year 2 $ Year 3 $ Year 4 $ b) Determine the depreciation allowance for each year using DDB method. Year 1 $ Year 2 $ Year 3 $ Year 4 $ c) Determine the depreciation allowance for each year using MACRS....
A tractor Unit for use Over-The-Road initially costing $350,000 will have a salvage value of $100,000...
A tractor Unit for use Over-The-Road initially costing $350,000 will have a salvage value of $100,000 after three years. Revenue will be $150,000 per year: Maintenance will be $20,000 per year. Using MACRS depreciation with half-year convention, 40% tax rate, and 6% market rate, what will be the Present Value of all "After Tax Cash Flows"
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT