A company purchased a long-term asset for $850,000. The asset has a 25% CCA rate. At...
A company purchased a long-term asset for $850,000. The asset has a 25% CCA rate. At the end of year 6 the company sold the asset for 250,000. Given this information, determine the value of the terminal loss or recapture at the end of year 6. Discuss the consequences of the loss or recapture.
Homework Answers
The depreciation table for 6 years will be as under
| Year | Opening balance | Depreciation= Opening balance*25% | Closing balance= Opening balance- Depreciation |
| 0 | 850000 | 212,500 | 637,500 |
| 1 | 637,500 | 159,375 | 478,125 |
| 2 | 478,125 | 119,531 | 358,594 |
| 3 | 358,594 | 89,648 | 268,945 |
| 4 | 268,945 | 67,236 | 201,709 |
| 5 | 201,709 | 50,427 | 151,282 |
| 6 | 151,282 | 37,820 | 113,461 |
The selling price 250,000 is greater than the closing balance of 113461
CCA recapture = 250,000- 113461 = $136539
Add Answer to:
A company purchased a long-term asset for $850,000. The asset
has a 25% CCA rate. At...
1) A. Six years ago, the Zircon company purchased a long-term asset for $3,875,500. The asset...
1) A. Six years ago, the Zircon company purchased a long-term asset for $3,875,500. The asset has a 20% CCA rate. Recently, at the end of year six, Zircon sold the asset for 850,000. Given this information, determine the value of the terminal loss or recapture at the end of year six. B. Zircon Company's effective tax rate is 26%. Calculate the value of the CCA tax shield for the third year (year 3).
4. A. Six years ago, the Zircon company purchased a long-term asset for $3,875,500. The asset...
4. A. Six years ago, the Zircon company purchased a long-term asset for $3,875,500. The asset has a 20% CCA rate. Recently, at the end of year six, Zircon sold the asset for 850,000. Given this information, determine the value of the terminal loss or recapture at the end of year six. B. Zircon Company's effective tax rate is 26%. Calculate the value of the CCA tax shield for the third year (year 3). btw, what are "effective tax rate"...
Amazing Brentwood Inc. bought a long- term asset for $100,000. The asset has a 30% CCA...
Amazing Brentwood Inc. bought a long- term asset for $100,000. The asset has a 30% CCA rate. At the end of year 5, the firm sold the asset for 25% of its original value. In the year 2018, the firm just paid $420 in dividends and $611 in interest expense. The addition to retained earnings is $397.74 and net new equity is $750. The tax rate is 34 percent. Sales are $6,250 and depreciation is $710. 1. Given this information,...
Q2. (25 marks) Calculate depreciation and CCA On July 2, 2019, Vicuna Inc. purchased equipment for...
Q2. (25 marks) Calculate depreciation and CCA On July 2, 2019, Vicuna Inc. purchased equipment for $720,000. This equipment has an estimated useful life of six years and an estimated residual value of $30,000. Depreciation is taken for the portion of the year the asset is used. The asset is a Class 8 asset with a maximum CCA rate of 20%. Vicuna has a December year end. Instructions a) Complete the schedule below by determining the depreciation expense/CCA and year-end...
An asset has an installed cost of $250,000, a life of 5 years, a CCA rate...
An asset has an installed cost of $250,000, a life of 5 years, a CCA rate of 30%, and a salvage value of $5,000. This asset can be leased for 5 years at a rate of $50,000 per year, payable at the beginning of each year. The lessee's marginal tax rate is 35% and borrowing cost is 10%. What is the net advantage to leasing for the lessee? Round your answer to the nearest dollar. $33,839 $52,652 $37,488 -$43,613 $49,548
An asset has an installed cost of $250,000, a life of 5 years, a CCA rate...
An asset has an installed cost of $250,000, a life of 5 years, a CCA rate of 30%, and a salvage value of $5,000. This asset can be leased for 5 years at a rate of $50,000 per year, payable at the beginning of each year. The lessee's marginal tax rate is 35% and borrowing cost is 10%. What is the net advantage to leasing for the lessee? Round your answer to the nearest dollar. -$43,613 $33,839 $37,488 $49,548 $52,652
Tangier Company paid cash to purchase a long-term operational asset. The cost of the asset will...
Tangier Company paid cash to purchase a long-term operational asset. The cost of the asset will be expensed (depreciated). Multiple Choice on the day it is purchased. at the end of its useful life. over the useful life of the asset. when the asset is sold
finance
Mini-Case Analysis 1: Amazing Brentwood Inc.Amazing Brentwood Inc. bought a long-term asset for $100,000. The asset has a 30% CCA rate. At the end of year 5, the firm sold the asset for 25% of its original value. In the year 2018, the firm just paid $420 in dividends and $611 in interest expense. The addition to retained earnings is $397.74 and net new equity is $750. The tax rate is 34 percent. Sales are $6,250 and depreciation is $710.1. Given...
if 25% of the common stock of an investee company is purchased as a long-term investment, the appropriate method of...
if 25% of the common stock of an investee company is purchased as a long-term investment, the appropriate method of accounting for the investment is a. the cost method. b. the equity method. C. the preparation of consolidated financial statements. d. determined by agreement with whomever owns the remaining 90% of the stock. On January 1, 2020, Jamestina Corp. paid $1,800,000 for 100,000 shares of Belinda Company's common stock, which represents 25% of Belinda's outstanding common stock. Belinda reported net...
A proprietor purchases an income-producing asset that has a class life of five years. It is...
A proprietor purchases an income-producing asset that has a class life of five years. It is the only asset the company owns. The proprietor sells the asset after four years. If the asset's market value has declined by more than the CCA taken, ________ for the year. Choose the correct answer. A. there will be a capital gain B. the UCC balance will be negative C. there will be a capital loss D. there will be a terminal loss
Amazing Brentwood Inc. bought a long- term asset for $100,000. The asset has a 30% CCA rate. At the end of year 5, the firm sold the asset for 25% of its original value. In the year 2018, the firm just paid $420 in dividends and $611 in interest expense. The addition to retained earnings is $397.74 and net new equity is $750. The tax rate is 34 percent. Sales are $6,250 and depreciation is $710. 1. Given this information,...
Q2. (25 marks) Calculate depreciation and CCA On July 2, 2019, Vicuna Inc. purchased equipment for $720,000. This equipment has an estimated useful life of six years and an estimated residual value of $30,000. Depreciation is taken for the portion of the year the asset is used. The asset is a Class 8 asset with a maximum CCA rate of 20%. Vicuna has a December year end. Instructions a) Complete the schedule below by determining the depreciation expense/CCA and year-end...
Tangier Company paid cash to purchase a long-term operational asset. The cost of the asset will be expensed (depreciated). Multiple Choice on the day it is purchased. at the end of its useful life. over the useful life of the asset. when the asset is sold
if 25% of the common stock of an investee company is purchased as a long-term investment, the appropriate method of accounting for the investment is a. the cost method. b. the equity method. C. the preparation of consolidated financial statements. d. determined by agreement with whomever owns the remaining 90% of the stock. On January 1, 2020, Jamestina Corp. paid $1,800,000 for 100,000 shares of Belinda Company's common stock, which represents 25% of Belinda's outstanding common stock. Belinda reported net...
Most questions answered within 3 hours.
-
Can you figure out if any R functions used to subset a time
series 1 or...
asked 17 minutes ago -
Which of the following is correct?
A. APC + MPS = 1
B. APS + MPS...
asked 28 minutes ago -
Given a regression sum of squares equal to 2373.59 and a total
sum of squares equal...
asked 2 hours ago -
Compare and contrast the linear motion and angular motion
equations F ma and . That is,...
asked 1 hour ago -
Now that this course has taken you on a journey of introduction
to the world of...
asked 1 hour ago -
The sandwich maker of the EE-Cole-Eye Sandwich Truck was just
fired (for a reason described below)...
asked 4 hours ago -
Name the following coordination compounds using systematic
nomenclature.
1. [Co(H2O)6]Cl2:
2. [Cr(NH3)6](NO3)3:
3. K4[Fe(CN)6]:
4. Na[Au(CN)4]:...
asked 3 hours ago -
Propose an efficient synthesis of 2-Bromo-5-nitrotoluene from
benzene. Hint: 3 steps. Consider directing effects of substituents....
asked 5 hours ago -
This assignment will explore the impact of corporate decisions
on a local versus a global perspective....
asked 5 hours ago -
Given the function below, F(w,x,y,z)= x’z+w’z’+w’y
a) draw a logic diagram for an implementation which uses...
asked 4 hours ago -
Most political philosophers believe we have a duty to obey laws,
even if the laws in...
asked 5 hours ago -
Which of the following are common negotiation outcome
mistakes?
a. Leave money on the table b....
asked 5 hours ago