Company A | Company B | Company C | |||
Straight line method | Double declining bal. depr. | Units of production | |||
Cost | $70,000 | $70,000 | $70,000 | ||
Life | 4 years | 4 years | 200,000 miles | ||
Salvage value | $5,000 | $5,000 | $5,000 | ||
Depreciation rate | 25% | 50% | 0.325 per miles | ||
Formula | ((Cost-salvage value)/useful life)/(cost-salvage value) | 1/useful life*2*100 | (Cost-salvage value)/estimated life in miles | ||
((70,000-5000)/4)/(70000-5000) | 1/4*2*100 | (70,000-5,000)/200,000 | |||
Revenue | $59,000 | $59,000 | $59,000 | ||
Less : Depreciation 31 Dec 2018 | $16,250 | $35,000 | $21,450 | ||
(65,000*25%) | (70,000*50%) | (66,000*0.325) | |||
Net Income | $42,750 | $24,000 | $37,550 | ||
Book value of asset | $53,750 | $35,000 | $48,550 | ||
(70,000-16,250) | (70,000-35,000) | (70,000-21,450) | |||
Depreciation 31 Dec. 2019 | $16,250 | $17,500 | $13,325 | ||
Depreciation 31 Dec. 2020 | $16,250 | $8,750 | $12,675 | ||
Depreciation 31 Dec. 2021 | $16,250 | $3,750 | $17,550 | ||
a-1 | Company A | $42,750 | |||
Company B | $24,000 | ||||
Company C | $37,550 | ||||
a-2 | Company A will report highest amount of Net Income | ||||
c-1 | Company A | $53,750 | |||
Company B | $35,000 | ||||
Company C | $48,550 | ||||
c-2 | Highest book value will be reported by Company A | ||||
d-1 | Company A | $171,000 | (59000*4-65000) | ||
Company B | $171,000 | (59000*4-65000) | |||
Company C | $171,000 | (59000*4-65000) | |||
d-2 | All company have the same retained earnings | ||||
e | The cash flow from operating activities will be | Lowest | For | Company B | If income tax is not considered |
Depreciation expense | is NOT | a cashflow item |
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Required information [The following information applies to the questions displayed below.) Three different companies each purchased...
Required Information (The following information applies to the questions displayed below] Three different companies each purchased trucks on January 1, 2018, for $88.000. Each truck was expected to last four years or 250.000 miles. Salvage value was estimated to be $6.000. All three trucks were driven 77.000 miles in 2018. 57,000 miles in 2019, 52,000 miles In 2020, and 72000 miles In 2021. Each of the three companies earned $77.000 of cash revenue during each of the four years. Company...
Required information [The following information applies to the questions displayed below] Three different companies each purchased trucks on January 1, 2018, for $88.000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $6.000. All three trucks were driven 77,000 miles In 2018, 57,000 miles In 2019,52,000 miles In 2020, and 72.000 miles in 2021. Each of the three companies earned $77.000 of cash revenue during each of the four years. Company A...
Required Information (The following information applies to the questions displayed below] Three different companies each purchased trucks on January 1, 2018, for $88.000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $6.000. All three trucks were driven 77.000 miles In 2018, 57,000 miles in 2019,52,000 miles In 2020, and 72,000 miles in 2021. Each of the three companies earned $77,000 of cash revenue during each of the four years. Company A...
Required Information [The following information applies to the questions displayed below.] Three different companies each purchased trucks on January 1, 2018, for $88.000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $6.000. All three trucks were driven 77,000 miles in 2018. 57.000 miles in 2019,52,000 miles in 2020, and 72.000 miles in 2021. Each of the three companies eamed $77,000 of cash revenue during each of the four years. Company A...
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