1) Computer equipment was acquired at the beginning of the year at a cost of $53,900. It had an estimated residual value of $4,300 and an estimated useful life of 5 years.
a. Determine the depreciable cost.
b. Determine the straight-line rate.
c. Determine the annual straight-line depreciation.
2) A machine costing $45,000 with a 5-year life and $2,700 residual value was purchased January 2. Compute depreciation for each of the five years, using the double-declining-balance method.
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
| Year 4 | $ |
| Year 5 | $ |
In: Accounting
At the beginning of the year, Patrick Company acquired a computer to be used in its operations. The computer was delivered by the supplier, installed by Patrick, and placed into operation. The estimated useful life of the computer is five years, and its estimated residual value is significant.
After reading the above prompt, respond to the following:
What costs should Patrick capitalize for the computer?
What is the objective of depreciation accounting?
What is the rationale for using accelerated depreciation methods?
In: Accounting
If you are to be acquired by another company, what will be the least preferred defense maneuver of your choice? Kindly explain the defense you will least likely use and elaborate further why such defense is your least among the choices.
In: Accounting
A storage tank acquired at the beginning of the fiscal year at a cost of $104,400 has an estimated residual value of $6,400 and an estimated useful life of four years.
a. Determine the amount of annual depreciation
by the straight-line method.
$fill in the blank 1
b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollar.
| Depreciation | |
| Year 1 | $fill in the blank 2 |
| Year 2 | $fill in the blank 3 |
In: Accounting
14, A residential property is acquired on the first day of the tax year for a purchase price of $300,000 plus acquisition costs of $15,000. The property is held for five years and sold on the last day of the tax year.
|
Tax Assessment |
Allocation Percentage |
Basis Allocation |
|
|
Land |
$ 60,000 |
30% |
$94,500 |
|
Improvements |
+ $140,000 |
70% |
$220,500 |
|
TOTAL Assessments |
$200,000 |
a. What is the cost-recovery deduction for each full year of acquisition?
b. What is the annual cost-recovery deduction for each full year of ownership?
c. What is the cost-recovery deduction for the year of disposition?
d. What is the total cost recovery taken during the recovery period?
In: Accounting
| [11] A piece of equipment was acquired for a cost of $400,000. It had an estimated useful life of 5 | |||||||
| years. The estimated salvage value is $40,000. The company controller uses a double declining | |||||||
| balance method of accelerated depreciation. The piece of equipment was purchased on Oct. 1, 2014. | |||||||
| The company is generating projections for the next few years and has asked you to show him what | |||||||
| depreciation expense, accumulated depreciation, and book value of this piece of equipment will be | |||||||
| over the life of the asset. SHOW YOUR WORK. You must show the depreciation expense for | |||||||
| each year, the accumulated depreciation at the end of each year, and the book value at the end of | |||||||
| each year. | |||||||
In: Accounting
Fastball Delivery Company acquired an adjacent lot to construct a new warehouse, paying $44,000 and giving a short-term note for $271,000. Legal fees paid were $1,570, delinquent taxes assumed were $9,300, and fees paid to remove an old building from the land were $19,100. Materials salvaged from the demolition of the building were sold for $4,700. A contractor was paid $957,600 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.
In: Accounting
A team specializing in the clinical care, was acquired for $300,000 and is expected to generate savings of $111,837.50 per year, while in operation. Applying an interest rate of 12% per annum, determine what the period of investment recovery would be considering the value of the money over time ("discounted payback period"). Round up your answer to the next integer.
Select one:
a. 3
b. No correct answer is provided.
c. 4
d. 6
e. 7
In: Finance
A company acquired a truck for $79,000 at the beginning of the fiscal year. It has a useful life of 5 years and a residual value of $9,000. The company uses the straight-line method of depreciation. After owning the truck for 2 years, the company sold it for $34,000. (a) Determine depreciation expense for each of the first 2 years, and (b) determine the gain or loss resulting from the sale.
In: Accounting
Tax Case 4
Goodwill Acquired in an Acquisition – Is it Deductible?
As the CFO of General Dynamo, you are very excited as you have just completed the negotiations related to the purchase of Apex Systems, a complimentary business to General Dynamo. The sole shareholder of Apex has agreed to either of the following purchase offers:
A: General Dynamo will pay $10,000,000 for 100% of the outstanding stock of Apex
OR
B: General Dynamo will pay $11,000,000 for 100% of the “net assets” of Apex, which includes all tangible and intangible assets as well as all recorded liabilities.
The fair value of the acquired assets and liabilities is as follows:
Current Assets (Tangible) $2,500,000
Long Term Assets (Tangible) $4,000,000
Liabilities $3,500,000
Net Tangible Assets Acquired $3,000,000
Based solely on the “net after-tax” cost of the acquisition, which purchase offer should you choose: A or B? Why?
Why does the seller require a higher price to be paid for acquiring “net assets” versus “stock”? What internal revenue service code section addresses how sales of assets versus sales of stock are taxed? What are the significant differences? What period may the goodwill be deducted for tax purposes? Why do you think the Internal Revenue Service treats these two purchase offers differently?
In: Accounting