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Vadim26 [7]
3 years ago
13

A company purchased a tractor on January 1, 2021, for $65,000. The tractor's useful life is estimated to be 30,000 miles with an

expected residual value of $5,000. If the company used the tractor 5,000 miles in 2021 and 3,000 miles in 2022, what is the balance for accumulated depreciation at the end of 2022 using the activity-based method
Business
1 answer:
Dvinal [7]3 years ago
7 0

Answer:

Accumulated depreciation at the end of year 2022 : $16,000

Explanation:

Activity based depreciation is whereby an asset is depreciated based on the asset’s activity such as the number of hours worked or the number of units produced, during a particular period of time. Activity based depreciation per year is calculated as:

[(Cost - Salvage value) x activity performed during the period] / Total estimated life activity of the asset

In 2021, the asset had an activity of 5000 miles. Depreciation for this year = [(65000 - 5000) x 5000] / 30,000

= $10,000

In 2022, the asset had an activity of 3000 miles. Depreciation for this year = [(65000 - 5000) x 3000] / 30000

= $6000

Accumulated depreciation at the end of year 22 : $10,000 + $6,000 = $16,000

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False, it is not protected
4 0
3 years ago
The factor that determines whether a product is classified as a consumer product or an industrial product is:
Vinvika [58]

Answer:

The answer is the end use of the product

Explanation:

The end use of a.product determines whether the product is s consumer or an industrial product.

A consumer product is a finished product. They are ready for immediate consumption. Consumers buy and eat it. For example, biscuits, coke etc

An industrial product is a product e.g raw materials, machinery, that is used to produce finished goods. Businesses and firms use industrial product to produce finished goods.

8 0
3 years ago
Chelsea Fashions is expected to pay an annual dividend of $1.26 a share next year. The market price of the stock is $24.09 and t
tekilochka [14]

Answer:

7.83%

Explanation:

This is calculated by using the Gordon growth model (GGM) formula as follows: P = d / (r - g) ……………………………………… (1)

Where;

P =  market price of the stock = $24.09

d = next year annual dividend = $1.26 r = cost of equity = ?

g = dividend growth rate = 2.6%, or 0.026

Substituting the values into equation and solve for r, we have:

24.09 = 1.26 / (r - 0.026)

24.09 (r - 0.026) = 1.26

24.09r - 0.62634 = 1.26

24.09r = 1.26 + 0.62634

24.09r = 1.88634

r = 1.88634 / 24.09

r = 0.0783038605230386, or 7.83038605230386%

Rounding to 2 decimal places. we have:

r = 7.83%

Therefore, the correct option is 7.83 percent.

6 0
3 years ago
Excelor stock is expected to pay $3.00 per share as its next annual dividend. The firm has a policy of increasing the dividend b
andrew-mc [135]

Answer:

30.92%

Explanation:

You find the answer by calculating the cost of equity using two methods; Dividend discount model and CAPM

<u>Dividend discount model;</u>

cost of equity; r = (D1/P0) +g

whereby, D1 = next year's dividend = 3.00

P0= current price = 13.65

g = dividend growth rate = 11% or 0.11 as a decimal

r = (3/13.65) + 0.11

r = 0.2198 + 0.11

r= 0.3298 or 32.98%

<u>Using CAPM;</u>

r = risk free + beta (Market risk premium)

r = 0.049 + (2.8 * 0.0856)

r = 0.049 + 0.2397

r = 0.2887 or 28.87%

Next, find the average of the two cost of equities;

=(32.98% + 28.87% )/2

= 30.92%

3 0
3 years ago
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