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In tax year 1, an electronics-packaging firm had a gross income of $25,000,000, $5,000,000 in salaries, $4,000,000 in wages, a loan principal payment of $200,000, an loan interest payment of $210,000. Other data on one of long-term asset:

Cost of the asset, $132,000

Useful life, 5 years

Salvage value, $ 20,000

1. Compute the annual depreciation allowances and the resulting book values, using

(a) The straight-line depreciation method.

(b) The double-declining-balance method.

2. Determine the net income of the company in tax year 1. For depreciation using part the straight-line depreciation method.

 

 

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Romarie Khazandra Marijuan
Romarie Khazandra MarijuanLv10
28 Sep 2019

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Related questions

1. Restek Chromatography Products and Solutions company purchased new packaging equipment with an estimated useful life of 10 years. Cost of the equipment was $20,000 and the salvage value was estimated to be $3000 at the end of its useful like.

a) (10 pts) For their company financial records, they are using the double declining-balance depreciation method. What is the depreciation amount they would record in their company financial records for the 7th year of the asset's life?

b) (5 pts) If the company was instead using the straight-line method of depreciation, what would be the depreciation amount they would record in their company financial records for the 7th year of the asset's life?

A company buys new office furniture for $75,000 with a 7-year depreciable life and a $5,000 Salvage Value. Use the following depreciation methods to determine the depreciation schedule (dt) and the office furniture's book value at the end of year 5. It is not being sold in year 5.

a. Straight Line

b. Sum-of-Years'- Digits (SOYD-Method)

c. Double declining balance (DDB-Method), assume any remaining depreciation is claimed in the last year.

d. MACRS depreciation, where the Salvage Value is zero.

 

The Company described in problem 1 is selling the office furniture after 3 years for $40,000.

a) Determine the MACRS depreciation schedule for 3 years of ownership

b) Determine any extra taxable income (recaptured depreciation), if any, on the sale of the furniture.

suppose the asset bought for $100,000 has been sold for $100000 after two years. which of the following statement is most accurate?

I- there is capital gain

II- there is capital loss

III- there is depreciation recapture

2- Suppose the asset has been sold for $110,000 after two years. Initial purchase price of $100,000, a gross income of $40,000, a current book value of $60,000, a depreciation amount of $10,000, and tax rate of 50%. What is the taxable income?

3- A truck was purchased 3 years ago for $45,000 and can be sold today for $24,000. The operating costs are $9,000 per year, and it is expected to last 4 more years with a $5,000 salvage value. A new truck, which will perform that same service, can be purchased for $50,000, and it will have a life of 10 years with operating costs of $28,000 per year and a $10,000 salvage value. What is the value that should be used as P for the presently owned vehicle in a replacement study?

4- an asset was acquired by Hugo and Sons for a first cost of $100000 via a 10% per year loan that needs to be paid back using equal uniform amounts at the end of each year in 2 years. The amount of interest paid for the first year on this loan is?

5- an asset was acquired by Hugo and Sons for a first cost of $100000 via a 10% per year loan that needs to be paid back using equal uniform amounts at the end of each year in 2 years. In the first year, the company claimed $60,000 depreciation. If the gross income is $200,000 and operating expenses are $50,000, then the taxable income is?

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