Homework Answers
Ans:
| Particulars | Depreciation amount($) |
| office furniture(73000*0.143) | 10,439 |
| Automobile(0.200*73,000) | 14,600 |
| electric and gas utility property(0.038*73,000/) | 2,774 |
| sewage treatment plant(0.050*73000) | 3,650 |
1. office furniture falls in 7 year MACRS and depreciation amount for 1st year is 0.143
2. automobile falls in 5 years MACRS and deprecation amount for 1st year is 0.200
3. Electric and gas utility property falls in 20 years MACRS and depreciation amount for 1st year will be 0.038
4. sewage treatment plant falls in 15 Years MACRS and depreciation amount will be 0.050
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Problem 12-26 MACRS depreciation categories (LO12-4) 54 Assume $73,000 is going to be invested in each...
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An asset was purchased three years ago for $100,000. It falls
into the five-year category for MACRS depreciation. The firm is in
a 25 percent tax bracket. Use Table 12–12.
a. Compute the tax loss on the sale and the
related tax benefit if the asset is sold now for $13,060.
(Input all amounts as positive values. Do not round
intermediate calculations and round your answers to whole
dollars.)
b. Compute the gain and related tax on the sale if...
Universal Electronics is considering the purchase of
manufacturing equipment with a 10-year midpoint in its asset
depreciation range (ADR). Carefully refer to Table 12–11 to
determine in what depreciation category the asset falls. (Hint: It
is not 10 years.) The asset will cost $255,000, and it will produce
earnings before depreciation and taxes of $85,000 per year for
three years, and then $40,000 a year for seven more years. The firm
has a tax rate of 25 percent. Assume the...
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The
summit petroleum Corporation will purchase an asset that qualifies
for three year MACRS depreciation. The cost is $430,000 in the ass
that will provide the following stream of earnings before
depreciation and taxes for the next four years:
Year 1: $200,000
Year 2: 245000
Year 3: 84,000
Year 4: 76,000
The firm is in a 40% tax bracket and has a cost of capital of
12%.
A. Calculate the net present value. Use the formula and
financial calculator methods....
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to five-year MACRS depreciation. The balance is in nondepreciable
property. The contract covers six years; at the end of six years,
the nondepreciable assets will be sold for $120,000. The
depreciated assets will have zero resale value. Use Table 12-12.
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