The primary advantage to immediately expensing depreciation rather than using straight-line depreciation is that with immediate expensing the total amount of depreciation that can be taken, assuming the asset is used for its full tax life, is greater. a. True b. False
False - Immediately expensing depreciation does not increase the total amount of depreciation that can be taken.
The total amount of depreciation that can be taken is equal in both cases. However, with straight line depreciation, the amount is split equally over several years instead of expensing the entire amount in the first year.
The primary advantage to immediately expensing depreciation rather than using straight-line depreciation is that with immediate...
The primary advantage of accelerated depreciation over straight-line depreciation is that, while the total amount of depreciation and thus tax savings is unchanged, charges are taken sooner. This means that the firm gets the benefits of the tax savings sooner, which increases their present value. Select one: a. True b. False When considering two mutually exclusive projects, the firm should always select that project whose internal rate of return is the highest provided the projects have the same initial cost....
What is the effect of using MACRS rather than straight-line depreciation? It increases the NPV. The total amount of depreciation is increased. It increases gross fixed assets. It allows asset book values to increase with market values.
How is depreciation allocated when using the straight-line method? Depreciation expense is allocated in proportion to an asset's use in operations A constant percentage of an asset's book value as of the beginning of each period is allocated to depreciation expense • An equal amount of depreciation expense is allocated each period of an asset's useful life Salvage value is the expected net recovery when the asset is sold or removed from service. • True False
Why do we prefer diminishing value depreciation rather than straight line depreciation.
2. A company using straight-line depreciation purchases an asset for $6,000 and is depreciating this asset to zero over its three year tax life. The company's tax rate is 30%, if the company ends the project after two years and sells this equipment for $500, what will be the after-tax cash flow from the sale of this asset? (ANSWER $950) Then How to calculate book value?
Instructions Using the straight-line method of depreciation, calculate the depreciation expense, accumulated depreciation balance, and book value for each of the four years of the van's useful life. a. Enter all amounts as positive values. Do not use a minus sign or parentheses for any values to be subtracted. (Always use cell references and formulas where appropriate to receive full credit. If you copy paste from the Instruction tab you will be marked wrong.) Total Points Total Points A B...
Straight-Line Depreciation Rates Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage, assuming that the residual value of the fixed asset is to be ignored: (a) 4 years, (b) 8 years, (c) 10 years, (d) 16 years, (e) 25 years, (f) 40 years, (g) 50 years. If required, round your answers to two decimal places. Years Percentage 4 years 8 years 10 years 16 years 25 years 40 years 50 years...
A company used straight-line depreciation for an item of equipment that cost $13,550, had a salvage value of $2,600 and a six-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,355 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:
A company used straight-line depreciation for an item of equipment that cost $18,250, had a salvage value of $4,600 and a six-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,825 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life Multiple Choice $1,365. $4140 $4,600 $7008. $3,200.
A company used straight-line depreciation for an item of equipment that cost $11,000, had a salvage value of $1,700, and had a 6-year useful life. After depreciating the asset for 4 complete years, the salvage value was reduced to $1,100 and its total useful life was increased from 6 years to 9 years. Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life (round depreciation per year to a...