Question

! Required information 1.66 Use the following information for the Exercises below. polnts [The following information applies to the questions displayed below] Tory Enterprises pays $245,400 for equipment that will last five years and have a $44,300 salvage value. By using the equipment in its operations for five years, the company expects to earn $89,200 annually, after deducting all expenses except depreciation. еВook Hint Exercise 8-9 Straight-line depreciation and income effects LO P1 Print Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming straight-line depreciation is used. References Income Before Depreciation Net (Pretax) Expense Income Depreciation Year Year 2 Year 3 Year 4 Year 5 Totals Mc Graw <Prev 4 of 6 Hill m

Answer 1

Answer

• Working

A	Cost	$          245,400.00
B	Residual Value	$            44,300.00
C=A - B	Depreciable base	$          201,100.00
D	Life [in years]	5
E=C/D	Annual SLM depreciation	$            40,220.00

• Requirement

Year	Income before depreciation	Depreciation expense	Net (Pretax) Income
1	$89,200	$40,220	$48,980
2	$89,200	$40,220	$48,980
3	$89,200	$40,220	$48,980
4	$89,200	$40,220	$48,980
5	$89,200	$40,220	$48,980
TOTAL	$446,000	$201,100	$244,900