Mike is applying for a home loan and wants to buy a house worth $150,000 in a neighborhood close to his work. however, he only h
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Answer:
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Explanation:
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A.
Cost of asset = c
Useful life = 5
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life)
= 2 × (1/5) = 0.4 = 40%
Because the depreciation factor is 40%, the remaining book value after depreciation would be 60%.
Note that : Book value in year 1 = Cost of asset - Depreciation expense of year 1
Book value in year in subsequent years = previous book value - that year's depreciation expense
The book value in year 2: 0.6c x $51,000
Solve for c = 51,000 / 0.6 = 85,000
So, the book value in year 2 is $85,000
The book value in year 1 which is also the cost of the asset can be found using this equation : (2 / 5 ) x c = $85,000
Solve for c = $85,000 × (5/2) = $212500
The cost of the asset is $212,500
For asset b
Sum of the year Depreciation expense = (number of useful life remaining / sum of useful years) x (Cost of asset - Salvage value)
number of useful life remaining at year 2 = 7
Sum of useful life = 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 = 36
The equation for year 2 depreciation : (7/36) × ($40,000 - Salvage value) = $7,000
0.194444 × ($40,000 - Salvage value) = $7,000
Make salvage value the subject of the formula and solve
Salvage value = $4,000
For asset c,
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
Inputting the values given for asset C into the above equation: ($103,000 - $13,000) ÷ useful life = $9,000
= $90,000 / useful life = $9,000
Solve for useful life, useful life = 10 years
For asset D,
To find the depreciation method used , we have to employ trial and error method. We would try all the depreciation methods available and determine which depreciation method would give us the depreciation value of $23,900
I would start with the straight line depreciation method Deprecation method.
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
= ($268,000-$29,000)/10 = $23,900
From the above calculation, the depreciation method used is the straight line depreciation method.
For asset E,
The 150% declining method = Depreciation factor x cost of the asset
Depreciation factor = 1.5 x (1/useful life)
1.5 x (1/8) = 0.1875
To derive the depreciation expense in year 2, the book value at the beginning of year 2 has to be determined. To determine the year 2 book value, the depreciation expense in year one has to be determined.
Year 1 depreciation expense = 0.1875 x $219,000 = $41,062.50
Year 2 , book value = $219,000 - $41,062.50 = $177,937.50
Depreciation expense in year 2 = 0.1875 x $177,937.50 = $33,363.28
I hope my answer helps you
Answer: Trade between the two countries is beneficial when United States trade food to Canada and Canada would trade televisions to the United States.
Explanation: In international trade, each country will produce a good in which it has a comparative advantage (lower opportunity cost).
Opportunity cost of food is,
Unites states =
Canada =
Opportunity cost of television is,
Unites states =
Canada =
Since, opportunity cost of food is lower in the United states, United states will export food.
Opportunity cost of television is lower in Canada, Canada will export television to the United States.