Homework Answers
| Cost of new asset | $ 180,000.00 | |||||
| Estimated life of asset, in years | 4 | |||||
| Discount Rate | 10% | |||||
| Tax rate | 40% | |||||
| Estimated salvage value | 0 | |||||
| a) The incremental PV of using SYD depreciation rather than SL depreciation, at a discount rate of 10% | ||||||
| Depreciation Method | ||||||
| Year | SYD | SLN | Difference | Tax effect = 40% x differnce | PV @ 10% | Present Value |
| 1 | $72,000.00 | $45,000.00 | $ 27,000.00 | $ 10,800.00 | 0.909 | $ 9,817.20 |
| 2 | $54,000.00 | $45,000.00 | $ 9,000.00 | $ 3,600.00 | 0.826 | $ 2,973.60 |
| 3 | $36,000.00 | $45,000.00 | $ (9,000.00) | $ (3,600.00) | 0.751 | $ (2,703.60) |
| 4 | $18,000.00 | $45,000.00 | $ (27,000.00) | $ (10,800.00) | 0.683 | $ (7,376.40) |
| Total | $ 180,000.00 | $ 180,000.00 | present value of the tax benefits | $ 2,710.80 | ||
| b)The incremental PV of using DDB depreciation rather than SL depreciation, at a discount rate of 10% | ||||||
| Year | DDB | SLN | Difference | Tax effect = 40% x differnce | PV @ 10% | Present Value |
| 1 | $90,000.00 | $45,000.00 | $ 45,000.00 | $ 18,000.00 | 0.909 | $ 16,362.00 |
| 2 | $45,000.00 | $45,000.00 | $ - | $ - | 0.826 | $ - |
| 3 | $22,500.00 | $45,000.00 | $ (22,500.00) | $ (9,000.00) | 0.751 | $ (6,759.00) |
| 4 | $22,500.00 | $45,000.00 | $ (22,500.00) | $ (9,000.00) | 0.683 | $ (6,147.00) |
| Total | $ 180,000.00 | $ 180,000.00 | present value of the tax benefits | $ 3,456.00 | ||
| c) The incremental PV of using MACRs depreciation rather than SL depreciation, at a discount rate of 10% | ||||||
| Year | MACRS | SLN | Difference | Tax effect = 40% x differnce | PV @ 10% | Present Value |
| 1 | $59,994.00 | $45,000.00 | $ 14,994.00 | $ 5,997.60 | 0.909 | $ 5,451.82 |
| 2 | $80,010.00 | $45,000.00 | $ 35,010.00 | $ 14,004.00 | 0.826 | $ 11,567.30 |
| 3 | $26,658.00 | $45,000.00 | $ (18,342.00) | $ (7,336.80) | 0.751 | $ (5,509.94) |
| 4 | $13,338.00 | $45,000.00 | $ (31,662.00) | $ (12,664.80) | 0.683 | $ (8,650.06) |
| Total | $ 180,000.00 | $ 180,000.00 | present value of the tax benefits | $ 2,859.13 | ||
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signment Saved Help Save & Exit Submit Check my work Freedom Corporation acquired a fixed asset...
Check my work Freedom Corporation acquired a fixed asset for $200,000. Its estimated life at time...
Check my work Freedom Corporation acquired a fixed asset for $200,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 11% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C, TABLE 2.) 0.25 points Skipped Required: 1. What is the incremental present value of the tax benefits resulting from calculating depreciation using the sum-of-the-years’-digits (SYD) method rather than the straight-line (SLN)...
Check my work Freedom Corporation acquired a fixed asset for $200,000. Its estimated life at time...
Check my work Freedom Corporation acquired a fixed asset for $200,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 11% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C TABLE 2.) 0.25 points eBook Required: 1. What is the incremental present value of the tax benefits resulting from calculating depreciation using the sum-of-the-years'-digits (SYD) method rather than the straight-line (SLN)...
Freedom Corporation acquired a fixed asset for $120,000. Its estimated life at time of purchase was...
Freedom Corporation acquired a fixed asset for $120,000. Its
estimated life at time of purchase was 4 years, with no estimated
salvage value. Assume a discount rate of 7% and an income tax rate
of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C,
TABLE 2.)
Required: 1. What is the incremental present value of the tax
benefits resulting from calculating depreciation using the
sum-of-the-years’-digits (SYD) method rather than the straight-line
(SLN) method on this asset? Use the...
Freedom Corporation acquired a fixed asset for $220,000. Its estimated life at time of purchase was...
Freedom Corporation acquired a fixed asset for $220,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 7% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C, TABLE 2.) TABLE2 Present Value of Annuity of $1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901...
i tried to answer 996,-996,292,-292,3201,-3201, all these were incorrect. Freedom Corporation acquired a fixed asset for...
i tried to answer 996,-996,292,-292,3201,-3201, all these were
incorrect.
Freedom Corporation acquired a fixed asset for $220,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 7% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C, TABLE 2.) TABLE 2 Present Value of Annuity of $1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25%...
*For 2019 Thank you! 10 A Saved Help Save & Exit Submit 87 Check my work...
*For 2019
Thank you!
10 A Saved Help Save & Exit Submit 87 Check my work Problem 10-48 (LO 10-2) [The following information applies to the questions displayed below.) At the beginning of the year, Anna began a calendar-year business and placed in service the following assets during the year: Asset Computers Office desks Machinery Office building Date Acquired 1/30 2/15 7/25 8/13 Cost Basis $ 28,000 $ 32,000 $ 75,000 $ 400,000 Assuming Anna does not elect $179 expensing...
Sheffield Corporation purchased an asset at a cost of $58,750 on March 1, 2020. The asset...
Sheffield Corporation purchased an asset at a cost of $58,750 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $4,700. For tax purposes, the MACRS class life is 5 years. MACRS Depreciation Rates by Class of Property Recovery Year 3-year (200% DB) 5-year (200% DB) 7-year (200% DB) 10-year (200% DB) 15-year (150% DB) 20-year (150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 ...
Francis Corporation purchased an asset at a cost of $50,000 on March 1, 2020. The asset...
Francis Corporation purchased an asset at a cost of $50,000 on
March 1, 2020. The asset has a useful life of 8 years and a salvage
value of $4,000. For tax purposes, the MACRS class life is 5
years.
MACRS Depreciation Rates by Class of
Property
Recovery
Year
3-year
(200% DB)
5-year
(200% DB)
7-year
(200% DB)
10-year
(200% DB)
15-year
(150% DB)
20-year
(150% DB)
1
33.33
20.00
14.29
10.00
5.00
3.750
2
44.45
32.00
24.29
18.00
9.50
7.219 ...
vaughn Corporation purchased an asset at a cost of $56,250 on March 1, 2020. The asset has a useful life of 8 years and...
vaughn Corporation purchased an asset at a cost of $56,250 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $4,500. For tax purposes, the MACRS class life is 5 years. Recovery Year 3-year (200% DB) 5-year (200% DB) 7-year (200% DB) 10-year (200% DB) 15-year (150% DB) 20-year (150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 3 14.81* 19.20 17.49 14.40 8.55 6.677 ...
Metlock Corporation purchased an asset at a cost of $50,000 on March 1, 2020. The asset has a useful life of 8 years and...
Metlock Corporation purchased an asset at a cost of $50,000 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $4,000. For tax purposes, the MACRS class life is 5 years. MACRS Depreciation Rates by Class of Property Recovery Year 3-year (200% DB) 5-year (200% DB) 7-year (200% DB) 10-year (200% DB) 15-year (150% DB) 20-year (150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 ...
Check my work Freedom Corporation acquired a fixed asset for $200,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 11% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C, TABLE 2.) 0.25 points Skipped Required: 1. What is the incremental present value of the tax benefits resulting from calculating depreciation using the sum-of-the-years’-digits (SYD) method rather than the straight-line (SLN)...
Check my work Freedom Corporation acquired a fixed asset for $200,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 11% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C TABLE 2.) 0.25 points eBook Required: 1. What is the incremental present value of the tax benefits resulting from calculating depreciation using the sum-of-the-years'-digits (SYD) method rather than the straight-line (SLN)...
Freedom Corporation acquired a fixed asset for $120,000. Its
estimated life at time of purchase was 4 years, with no estimated
salvage value. Assume a discount rate of 7% and an income tax rate
of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C,
TABLE 2.)
Required: 1. What is the incremental present value of the tax
benefits resulting from calculating depreciation using the
sum-of-the-years’-digits (SYD) method rather than the straight-line
(SLN) method on this asset? Use the...
Freedom Corporation acquired a fixed asset for $220,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 7% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C, TABLE 2.) TABLE2 Present Value of Annuity of $1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901...
i tried to answer 996,-996,292,-292,3201,-3201, all these were
incorrect.
Freedom Corporation acquired a fixed asset for $220,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 7% and an income tax rate of 40%. (Use Exhibit 12.4, Appendix C, TABLE 1 and Appendix C, TABLE 2.) TABLE 2 Present Value of Annuity of $1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25%...
*For 2019
Thank you!
10 A Saved Help Save & Exit Submit 87 Check my work Problem 10-48 (LO 10-2) [The following information applies to the questions displayed below.) At the beginning of the year, Anna began a calendar-year business and placed in service the following assets during the year: Asset Computers Office desks Machinery Office building Date Acquired 1/30 2/15 7/25 8/13 Cost Basis $ 28,000 $ 32,000 $ 75,000 $ 400,000 Assuming Anna does not elect $179 expensing...
Francis Corporation purchased an asset at a cost of $50,000 on
March 1, 2020. The asset has a useful life of 8 years and a salvage
value of $4,000. For tax purposes, the MACRS class life is 5
years.
MACRS Depreciation Rates by Class of
Property
Recovery
Year
3-year
(200% DB)
5-year
(200% DB)
7-year
(200% DB)
10-year
(200% DB)
15-year
(150% DB)
20-year
(150% DB)
1
33.33
20.00
14.29
10.00
5.00
3.750
2
44.45
32.00
24.29
18.00
9.50
7.219 ...
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