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sp2606 [1]
3 years ago
11

Your bosses at the residential contracting firm has asked you to help them decide about whether they should keep a particular it

em of construction equipment or accept an offer for sale. The equipment cost $126,000 new and it has a useful life of eight years.The firm has been using a double declining balance (DDB) method of depreciation and this is the third year of ownership. Your firm has received an offer to purchase the item (at the end of this third year of ownership) for $60,000. However, your bosses only will sell if doing so will make a profit. To help your bosses decide whether or not they should sell the equipment, calculate the remaining book value at the end of year 3 (the anticipated time of sale).
Business
1 answer:
Margaret [11]3 years ago
6 0

Answer:

The remaining book value at the end of year 3 is $53,156.25 < Selling price

The Bosses should sell the equipment.

Explanation:

Under the straight-line method, useful life is 8 years, so the asset's annual depreciation will be 12.5% of the Depreciable cost.

Depreciable cost = Total asset cost - salvage value =  $126,000-$0 = $126,000

Under the double-declining-balance method the 12.5% straight line rate is doubled to 25% - multiplied times the Depreciable cost's book value at the beginning of the year.

In the first year, depreciation expense = 25% x $126,000 = $31,500

At the beginning of the second year, the Depreciable cost's book value is $126,000-$31,500 = $94,500

Depreciation expense in second year = 25% x $94,500 = $23,625

At the beginning of the year 3, the Depreciable cost's book value is $94,500-$23,625 = $70,875

Depreciation expense in second year = 25% x $70,875 = $17,718.75

Accumulated depreciation at the end of year 3 = $31,500  + $23,625 + $17,718.75 = $72,843.75

The remaining book value at the end of year 3 = Total asset cost - Accumulated depreciation at the end of year 3 = $126,000 - $72,843.75 = $53,156.25 < $60,000 (Selling price)

The Bosses should sell the equipment.

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Answer:

D. Absolute Advantage

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The absolute advantage for Russia in the question is that it has the only deposits of Yuksporite and using the same amount of labour input other countries would have used, Russia has the absolute advantage as the only manufacturer of goods that would come out of Yuksporite.

4 0
3 years ago
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What is the relationship between financial system and economy
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Answer:

Financial markets help to efficiently direct the flow of savings and investment in the economy in ways that facilitate the accumulation of capital and the production of goods and services.

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2 years ago
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One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent, paid semiannually, and a fa
Masja [62]

Answer:

option (C) - 6.11%

Explanation:

Data provided :

Coupon rate one year ago = 6.5% = 0.065

Semiannual coupon rate = \frac{0.065}{2} = 0.0325

Face value = $1,000

Present market yield = 7.2% = 0.072

Semiannual Present market yield, r = \frac{0.072}{2} = 0.036

Now,

With semiannual coupon rate bond price one year ago, C

= 0.0325 × $1,000

= $32.5

Total period in 15 years = 15 year - 1 year = 14 year

or

n = 14 × 2 = 28 semiannual periods

Therefore,

The present value = C\times[\frac{(1-(1+r)^{-n})}{r}]+FV(1+r)^{-n}

= \$32.5\times[\frac{(1-(1+0.036)^{-28})}{0.036}]+\$1,000\times(1+0.036)^{-28}

or

= $32.5 × 17.4591 + $1,000 × 0.37147

= $567.42 + $371.47

= $938.89

Hence,

The percent change in bond price = \frac{\textup{Final price - Initial price}}{\textup{Initial price}}\times100\%

= \frac{\textup{938.89-1,000}}{\textup{1,000}}

= - 6.11%

therefore,

the correct answer is option (C) - 6.11%

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3 years ago
Determine the monthly payment, total interest,
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5 0
3 years ago
The predetermined overhead rate for manufacturing overhead for 2020 is $4.00 per direct labor hour. Employees are expected to ea
timofeeve [1]

Answer:

$60,000

Explanation:

The computation of the estimated manufacturing overhead is shown below:

Estimated manufacturing overhead = Direct labor hours × predetermined overhead rate

where,

Direct labor hours = Total Direct labor cost ÷ Cost per hour

                              = ($100,000 × 75%) ÷ ($5)

                              = 15,000 direct labor hours

Now the estimated manufacturing overhead equal to

= 15,000 direct labor hours × $4

= $60,000

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3 years ago
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