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Describe a problem in replacement analysis in which the replacement was being considered due to reduced performance of the existing equipment.
Compute the annual depletion (each year may be cost-based or percentage-based). What is the PW at i = 12% of the depletion schedule?
Expenses (not including depletion allowances) were $2,500,000. What are the percentage depletion and the cost depletion allowances?
Western Carolina Coal Co. expects to produce 125,000 tons of coal annually for 15 years. Compute the annual depletion on a percentage basis.
During the construction of a highway bypass, earthmoving equipment costing $40,000. Determine the units-of-production depreciation schedule for the equipment.
Mining recently began on a new deposit of 10 million metric tons of ore. What is the maximum depletion allowance each year for the mine?
With units-of-production depreciation, what is the allowable depreciation rate per hour? What is the book value after 4000 hours of operation?
What is the depletion allowance for Years 1 to 3, if 42, 45, and 35 million board-feet are harvested by APC in those years?
From this amount, he had to pay $3000 as his share of the expense of producing the oil. Compute Mr. Salt's depletion allowance for the year.
When a major highway was to be constructed nearby, a farmer realized that a dry streambed running. Determine the farmer's depletion allowance.
What is the book value after 3 years? If the machine is sold for $1500 in Year 5, how much gain or recaptured depreciation is there?
What is the machine's book value after 5 years of depreciation? How much gain on sale or recaptured depreciation is there?
Determine the loss, gain, or recapture of MACRS depreciation on the sale. The ADR is 12 years for this machine.
The asset was just sold for 60% of its first cost. What is the size of the recaptured depreciation or loss at disposal using the following depreciation methods?
From a tax perspective, what is happening at the time of disposal, and what is the dollar amount?
Describe a replacement problem from your personal experience in which the question of cost saving vs. profit making was a key issue.
The present machine can be sold on the open market for $14,000. The cost to remove the old machine is $2000. Which are the relevant costs for the old machine?
The salvage value is expected to decrease by $20,000 each year to a value of zero. Using an interest rate of 8%, determine the economic life of the press.
A particular chemical process deposits scale on the inside of pipes. What is the economic life of the pipe if the interest rate is 12%?
The pump's end-of-year salvage values over the next 5 years are $42K, $40K, $38K, $32K, and $26K. Determine the pump's economic life.
If it uses 7% interest in its comparison, which method do you recommend? Show computations to support your recommendation.
Which is the preferred depreciation method for this profitable corporation? Use a spreadsheet to show your computations of the difference in present worths.
The warehouse is to be depreciated either by MACRS or SOYD depreciation. If 10% interest is appropriate, which depreciation method should be selected?
Use a spreadsheet to develop a depreciation schedule showing the machine's depreciation allowance and book value over its depreciable life.
If the machine's cost basis is $110,000, set up a depreciation schedule that shows depreciation charge and book value over the machine's 10-year useful life.