On August 3, Cinco Construction purchased special-purpose equipment at a cost of $7,536,100. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $66,920.

a. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciation method (half-year convention).

b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense.

c. Which of these two depreciation methods (straight-line or double-declining-balance) results in the highest net income for financial reporting purposes during the first two years of the equipment’s use?

Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,700 hours.

During May, the department operated at 9,120 standard hours, and the factory overhead costs incurred were indirect factory wages, $47,092; power and light, $22,500; indirect materials, $18,850; supervisory salaries, $19,200; depreciation of plant and equipment, $35,200; and insurance and property taxes, $19,550.

Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 9,120 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter all variances as positive amounts.

tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,700 hours.

During May, the department operated at 9,080 hours, and the factory overhead costs incurred were indirect factory wages, $42,268; power and light, $22,064; indirect materials, $18,700; supervisory salaries, $19,800; depreciation of plant and equipment, $35,700; and insurance and property taxes, $18,450.

Required:

On August 3, Cinco Construction purchased special-purpose equipment at a cost of $7,461,000. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $34,160.

a. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciation method (half-year convention).

b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense.

c. Which of these two depreciation methods (straight-line or double-declining-balance) results in the highest net income for financial reporting purposes during the first two years of the equipment’s use?

iger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,400 hours.

During May, the department operated at 8,740 hours, and the factory overhead costs incurred were indirect factory wages, $44,216; power and light, $28,240; indirect materials, $18,090; supervisory salaries, $20,400; depreciation of plant and equipment, $35,400; and insurance and property taxes, $15,600.

Use Correct Amount Descriptions

Depreciation of plant and equipment

Indirect factory wages

Indirect materials

Insurance and property taxes

Net controllable variance-favorable

Net controllable variance-unfavorable

Power and light

Supervisory salaries

Total controllable variances

Total factory overhead cost

Total factory overhead cost variance-favorable

Total factory overhead cost variance-unfavorable

Total fixed cost

Total variable cost

Volume variance-favorable

Volume variance-unfavorable

Required:

Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,740 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,400 hours.

During May, the department operated at 8,740 hours, and the factory overhead costs incurred were indirect factory wages, $44,216; power and light, $28,240; indirect materials, $18,090; supervisory salaries, $20,400; depreciation of plant and equipment, $35,400; and insurance and property taxes, $15,600.

Use Correct Amount Descriptions

Depreciation of plant and equipment

Indirect factory wages

Indirect materials

Insurance and property taxes

Net controllable variance-favorable

Net controllable variance-unfavorable

Power and light

Supervisory salaries

Total controllable variances

Total factory overhead cost

Total factory overhead cost variance-favorable

Total factory overhead cost variance-unfavorable

Total fixed cost

Total variable cost

Volume variance-favorable

Volume variance-unfavorable

Required:

Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,740 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

On August 3, Cinco Construction purchased special-purpose equipment at a cost of $1,938,400. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $83,040.

a. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciation method (half-year convention).

b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense.

c. Which of these two depreciation methods (straight-line or double-declining-balance) results in the highest net income for financial reporting purposes during the first two years of the equipment’s use?

On August 3, Cinco Construction purchased special-purpose equipment at a cost of $4,883,900. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $95,890.

a. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciation method (half-year convention).

b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense.

c. Which of these two depreciation methods (straight-line or double-declining-balance) results in the highest net income for financial reporting purposes during the first two years of the equipment’s use?

On August 3, Cinco Construction purchased special-purpose equipment at a cost of $7,377,200. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $10,940.

a. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciation method (half-year convention).

b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense.

c. Which of these two depreciation methods (straight-line or double-declining-balance) results in the highest net income for financial reporting purposes during the first two years of the equipment’s use?

     Brower, Inc. just constructed a manufacturing plant in Ghana. The construction cost 9 billion Ghanian cedi. Brower intends to leave the plant open for three years. During the three years of operation, cedi cash flows are expected to be 3 billion cedi, 3 billion cedi, and 2 billion cedi, respectively. Operating cash flows will begin one year from today and are remitted back to the parent at the end of each year. At the end of the third year, Brower expects to sell the plant for 5 billion cedi. Brower has a required rate of return of 17 percent. It currently takes 8,700 cedi to buy one U.S. dollar, and the cedi is expected to depreciate by 5 percent per year.

a.          Determine the NPV for this project. Should Brower build the plant

b. b.   How would your answer change if the value of the cedi was expected to remain unchanged from its current value of 8,700 cedis per U.S. dollar over the course of the three years? Should Brower construct the plant then?

Please show how to solve without using excel, thank you.