Novak Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method.Year Straight-Line Sum-of-the-Years'-Digits Double-Declining-Balance
1 $15,750 $26,250 $35,000
2 15,750 21,000 21,000
3 15,750 15,750 12,600
4 15,750 10,500 7,560
5 15,750 5,250 2,590
Total $78,750 $78,750 $78,750
Required:
a. What is the cost of the asset being depreciated?
b. What amount, if any, was used in the depreciation calculations for the salvage value for this asset?
c. Which method will produce the highest charge to income in Year 1?
d. Which method will produce the highest charge to income in Year 4?
e. Which method will produce the highest book value for the asset at the end of Year 3?
f. If the asset is sold at the end of Year 3, which method would yield the highest gain (or lowest loss) on disposal of the asset?
Answers
Answer:
a. What is the cost of the asset being depreciated?
the cost of the asset = $35,000 / 0.4 = $87,500
b. What amount, if any, was used in the depreciation calculations for the salvage value for this asset?
salvage value = $87,500 - (5 x $15,750) = $8,750
c. Which method will produce the highest charge to income in Year 1?
double declining results in the highest depreciation expense
d. Which method will produce the highest charge to income in Year 4?
straight line results in the highest depreciation expense
e. Which method will produce the highest book value for the asset at the end of Year 3?
straight line, book value = $87,500 - (3 x $15,750) = $40,250
f. If the asset is sold at the end of Year 3, which method would yield the highest gain (or lowest loss) on disposal of the asset?
double declining balance, since the carrying value is lowest = $87,500 - $35,000 - $21,000 - $12,600 = $18,900
e.g. if the assets is sold at $30,000, the gain = $11,100
under straight line method a $30,000 resale price would result in a loss(= $30,000 - $40,250 = -$10,250), while sum of years' digit would result in a gain = $30,000 - ($87,500 - $26,250 - $21,000 - $15,750) = $5,500
Related Questions
Suppose that Portugal and Switzerland both produce fish and olives. Portugal's opportunity cost of producing a crate of olives is 3 pounds of fish while Switzerland's opportunity cost of producing a crate of olives is 11 pounds of fish. By comparing the opportunity cost of producing olives in the two countries, you can tell that _____________ has a comparative advantage in the production of olives and _________ has a comparative advantage in the production of fish. Suppose that Portugal and Switzerland consider trading olives and fish with each other. Portugal can gain from specialization and trade as long as it receives more than ___________of fish for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than __________ of olives for each pound of fish it exports to Portugal. Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of fish) would allow both Switzerland and Portugal to gain from trade?a. 6 pounds of fish per crate of olives b. 2 pounds of fish per crate of olives c. 8 pounds of fish per crate of olives d. 18 pounds of fish per crate of olives
Dwayne invests $4,700 in a savings account at the beginning of each of the next twelve years. if his opportunity cost rate is 7 percent compounded annually, how much will his investment be worth after the last annuity payment is made? use the equation method to calculate the worth of the investment. (round your answer to two decimal places.)
The following data pertains to Xena Corp.: Xena Corp. Total Assets $23,610 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.2% Common Equity: Book Value $ 6,150 Market Value $25,830 Marginal Income Tax Rate 37% Market Beta 1.73 Determine the weight on equity capital that should be used to calculate Xena's weighted-average cost of capital. Select one: A. 73.8% B. 70.0% C. 24.0% D. 38.7%
In the Romer model, the inputs to production are: a. capital and labor. b. capital and ideas. c. labor and ideas. d. natural resources, labor, and ideas. e. labor and total factor productivity.
Answers
Answer:
Layla's federal income taxes to the nearest dollar are:
= $39,393.
Explanation:
a) Data and Calculations:
Layla's taxable income
for 2019 = $182,431 Income Tax
Income tax on (163,300) = $33,271.50
Excess of $163,300 19,131 = $6,121.92 ($19,131 * 32%)
Total income tax payable = $39,393.42
U.S. Tax Rates and Corresponding Tax Brackets (Single Individuals)
If taxable income is: Then income tax equals:
Not over $9,875 10% of the taxable income Over $9,875 but not over $40,125 $987.50 plus 12% of the excess over $9,875
Over $40,125 but not over $85,525 $4,617.5 plus 22% of the excess over $40,125
Over $85,525 but not over $163,300 $14,605.5 plus 24% of the excess over $85,525
Over $163,300 but not over $207,350 $33,271.5 plus 32% of the excess over $163,300
Over $207,350 but not over $518,400 $47,367.5 plus 35% of the excess over $207,350
Over $518,400 $156,235 plus 37% of the excess over $518,400 Layla's taxable income for 2019 was $182,431
Accounts Payable 13,900
Accounts Receivable 8,200
Allowance for Uncollectible Accounts $900 credit
Cash Sales 24,000
Lightning uses the percentage-of-credit-sales method and estimates 4% of sales are uncollectible. What is the ending balance of the allowance account after the year-end adjustment?
$3,900
$4,860
$3,000
$2,100
Answers
Answer:
$3900
Explanation:
Calculation to determine the ending balance of the allowance account after the year-end adjustment
Balance in allowance for uncollectible account$ 900
Add Bad debts during the period $3,000
($75,000*4%)
Ending Balance in allowance for uncollectible account$ 3,900
($900+$3,000)
Therefore the ending balance of the allowance account after the year-end adjustment is $3900
Answers
Depletion is the process of allocating the cost of natural resources to the period when it is consumed.
What is the significance of depletion?
Depletion can be regarded the lowering down in the level of quantity of a thing or an element, generally due to consumption, in such a way that a few costs are incurred upon such lowered quantity-levels.
In simple words, depletion can be regarded as the incurring of costs upon the reduction of a quantity of something. In the above case, the quantity of natural resources is reduced, causing depletion.
Hence, option A holds true regarding depletion.
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Answers
The cost of direct material used during the period would be $1,24,000.
What is inventory?
Inventory is an asset because the company invents money in that, it is the stock used in a particular business it starts with an opening balance of inventory and ends with its closing balance.
The cost of goods sold is the cost of the product which is sold during the year.
The formula for computing cost of goods sold(COGS):
OS= Opening Stock,
CS= Closing Stock.
Computation of cost of direct material:
Given that,
Opening stock of raw material = $27,000,
Closing stock of raw material = $28,000,
Purchases = $72,000 ($1,00,000-$28,000)
Putting the given values in the above formula, we get:
Hence, the cost of direct materials used during the period would be $1,27,000.
Learn more about inventory, refer:
Final answer:
The cost of the direct materials used during the year is $74,000. This was computed by adding the beginning raw materials inventory and purchases, then subtracting the end-year inventory and the indirect materials.
Explanation:
To calculate the cost of direct materials used during the period, you will need to take the beginning raw materials inventory, add the purchases made during the year, and then subtract the end of the year inventory and the indirect materials.
In this case, the calculation would be as follows: $27,000 (beginning inventory) + $100,000 (purchases) - $25,000 (ending inventory) - $28,000 (indirect materials) = $74,000. So the cost of direct materials used during the year is $74,000.
This calculation is part of managerial accounting, where it's crucial to keep track of direct and indirect costs to calculate the cost of goods manufactured and eventually obtain the cost of goods sold.
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b.
The U.S. government can file a criminal lawsuit against Scissorwire Inc. to seek
Scissorwire Inc. sells shares of its stock to the public, with each share valued at $16. After a year, the company incurs a loss and the price of the stock drops to $5. The company reveals that it had deliberately not registered with the SEC before going public and that it has no money to pay the investors. Which of the following holds well in this context?
Answer
a.
Scissorwire Inc. can register with the SEC at any point after the dip in shares.
b.
The U.S. government can file a criminal lawsuit against Scissorwire Inc. to seek criminal penalties.
c.
The investors have been negligent in not verifying registration before purchase of shares and cannot rescind their purchase.
d.
Scissorwire Inc. is liable for the violation of the Securities Exchange Act of 1934.
Answers
Answers
Answer:
$136,363
Explanation:
For computing the willing amount to pay, first we have to determine the expected cash flow that is shown below:
Expected cash flow is
= $80,000 × 0.5 + $220,000 × 0.5
= $40,000 + $110,000
= $150,000
Now the willing amount is
= Expected cash flow × 1 ÷ (1 + risk free investment + risk premium)
= $150,000 × 1 ÷ (1 + 10%)
= $150,000 × 0.9090
= $136,363