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Problem 4: (11 marks) (20 minutes) On January 2, 20x0, Chegal Ltd. purchased equipment for $100,000....
Question 2 (10 marks, 14 minutes) Total Graphics Ltd. ("TGL") purchased a new printing press on October 1, 2009, at a cost of $400,000. At the date of purchase, management estimated that the press would have a residual value of $80,000, an eight-year useful life, and could be expected to be operated for a total of 20,000 working hours. Actual machine usage was 2,000 hours in 2009, 6,000 hours in 2010, 5,200 hours in 2011 and 8,000 hours in 2012....
A firm uses straight line depreciation for fixed assets with an estimated useful life of 12 years for its financial statements and 8 years for taxable income. ● Equipment is bought for 500 on December 31, 20X0. ● The firm’s corporate income tax payments are 65 in 20X1, 69 in 20X2, and 57 in 20X3. ● In 20X1 and 20X2, the corporate tax rate is expected to be 19% for all years. ● On January 1, 20X3, legislation is enacted that reduces the tax...
A firm uses straight line depreciation for fixed assets with an estimated useful life of 12 years for its financial statements and 8 years for taxable income. ● Equipment is bought for 500 on December 31, 20X0. ● The firm’s corporate income tax payments are 65 in 20X1, 69 in 20X2, and 57 in 20X3. ● In 20X1 and 20X2, the corporate tax rate is expected to be 19% for all years. ● On January 1, 20X3, legislation is enacted that reduces the tax...
Exercise 5-2 Error correction (LO5-2) Bettner, Inc., is a calendar-year corporation whose financial statements for 20X0 and 20X1 included errors as follows: Year Ending Inventory Depreciation Expense 20X0 $ 12,000 overstated $ 22,300 overstated 20X1 8,000 understated 6,000 understated Assume that inventory purchases were recorded correctly and that no correcting entries were made at December 31, 20X0, or December 31, 20X1. The errors were discovered in 20X2, after the 20X1 financial statements were issued. Required: Ignoring income taxes, prepare the...
Sage Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2016 for $12,300,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2017, new technology was introduced that would accelerate the obsolescence of Sage’s equipment. Sage’s controller estimates that expected future net cash flows on the equipment will be $ 7,749,000 and that the fair value of the equipment is $ 6,888,000. Sage intends to continue using the...
Concord Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10,500,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Concord’s equipment. Concord’s controller estimates that expected future net cash flows on the equipment will be $6,615,000 and that the fair value of the equipment is $5,880,000. Concord intends to continue using the equipment,...
PROBLEM:3 Sangria Boat Lifts purchased equipment on January 1, 2017 for $96,000. It is estimated that the equipment will have a $5,000 residual value at the end of its 8-year useful life. It is also estimated that the equipment will produce 100,000 units over its 8-year life. Instructions: Answer the following independent questions. a) Calculate the amount of depreciation expense for the year ended December 31, 2017, using the straight-line method of depreciation. b) If 16,000 units of product are...
PROBLEM:3 Sangria Boat Lifts purchased equipment on January 1, 2017 for $96,000. It is estimated that the equipment will have a $5,000 residual value at the end of its 8-year useful life. It is also estimated that the equipment will produce 100,000 units over its 8- year life. Instructions: Answer the following independent questions. a) Calculate the amount of depreciation expense for the year ended December 31, 2017, using the straight-line method of depreciation. b) If 16,000 units of product...
James Barbers Pty Ltd purchases a new equipment on 1 January 2015. The equipment cost was $200,000 and useful life was 10 years with zero residual value. On January 1, 2019, the company decides that the equipment will last total 20 years rather than 10 years. The company uses straight-line method of depreciation and the fiscal year end is 31 December. 1. a. Calculate depreciate for 2015, 2016, 2017 and 2018. b. How will the equipment be reported on the...
Question 4 (20%) A company purchased and installed equipment on January 1 at a total cost of $72,000. Straight- line depreciation was calculated based on the assumption of a five-year life and no salvage value. The equipment was disposed of on July 1 of the fourth year. The company uses the calendar year. 1. Prepare the general journal entry to update depreciation to July 1 in the fourth year. 2. Prepare the general journal entry to record the disposal of...