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Ket [755]
3 years ago
9

A company purchased a delivery truck on January 1, 2021, for $100,000. The truck has an estimated life of 10 years and an estima

ted residual value of $10,000. If the company uses double-declining balance, what would be the book value of the truck after two years?
Business
1 answer:
Ray Of Light [21]3 years ago
5 0

Answer: The book value of the truck after two years, using the double-declining balance is $64,000.

Explanation: The double-declining method is otherwise known as reducing balance method. It is usually derived by using the formula below:

Double-declining depreciation = 2 X SLDP X BV

Where SLDP = straight-line depreciation percentage

            BV = Book value of the asset (Cost minus depreciation)

So using the straight-line depreciation method, we need to remove the salvage value from the cost and then divided by 10 years. That is, ($100,000 - $10,000) / 10 years = $9,000 yearly depreciation expense.

However, under the double-declining method, we need to divide the 100% by the useful life of the asset first to get the SLDP then multiply by 2, that is, 100%/10 years = 10% x 2 = 20%.

So 20% x $100,000 in year 1 (December 31, 2021) is $20,000

In year 2 (December 31, 2022), 20% x $80,000 ($100,000 - $20,000) = $16,000 and so on. The depreciation charge would stop immediately it falls below the salvage value of $10,000.

So the book value of the asset at year 2 is $64,000 ($100,000 - $36,000 accumulated depreciation)

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Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of
makvit [3.9K]

Answer:

$133,000 decrease

Explanation:

The computation of the impact on the operating income is shown below:

Sales for the year    $1,052,000

Less:

Variable cost -$862,000

Contribution margin $190,000

Less:

Fixed cost for 30% of $190,000   -$57,000

Impact on the operating income $133,000

This amount reflects the decrease in the operating income

5 0
3 years ago
Last year Rocco Corporation's sales were $225 million. If sales grow at 6% per year, how large (in millions) will they be 5 year
cupoosta [38]

Answer:

b. $301.10

Explanation:

Current Sales = P = $225,000,000

Growth rate = g = 6%

Number of year = 5 years

Using simple growth formula we will find the Sales value after 5 years.

Future Sales = Current Sale ( 1 + growth rate )^Number of years

A = P ( 1 + g )^n

A = 225,000,000 x ( 1 + 0.06 )^5

A = 225,000,000 x 1.33823

A = 301,101,750 = 301.10175 Million

So, the correct option is b. $301.10.

3 0
3 years ago
6. Bronco Co. is a U.S.-based MNC that has subsidiaries in Spain and Germany. Both subsidiaries frequently remit their earnings
Hatshy [7]

Answer:

Cash outflow of $579,500

Explanation:

Net cash flow is the sum of all cash inflow and outflows of the company.

In this question the company has cash outflow from Spain and inflow from Germany.

As per given data

Cash flow from Spain subsidiary = €5,000,000 outflow

Cash flow from German subsidiary = €4,500,000 inflow

Net cash flow to parent company = - €5,000,000 + €4,500,000

Net cash flow to parent company = - €500,000

The currency is converted using the exchange rate of $1.159 per euro.

Net cash Flow in U.S. dollars = - €500,000 x  $1.159 per euro

Net cash Flow in U.S. dollars = - $579,500

3 0
3 years ago
Cheryl purchased 5 identical hollow pine doors and 6 identical solid oak doors for the house she is building. The regular price
almond37 [142]

Answer:

The answer to this question is option C. $560

Explanation:

We can let the price of each hollow pine door = d and of each solid oak door = 2d.

Since each pine door = 40, d = 40, and the regular price of each solid oak door is (2)(4) = 80.

With a 25% discount, each solid oak door is 0.75(80) = 60.

So, the six oak doors cost 6 x 60 = 360 dollars, and the five pine doors cost 5 x 40 = 200 dollars. Thus, the total is 560 dollars.

Hence the answer is C

6 0
3 years ago
Read 2 more answers
A stock is expected to return 8% in a normal economy, 12% if the economy booms, and lose 3% if the economy moves into a recessio
JulijaS [17]

Answer: 6.91%

Explanation:

Expected return = Sum of (Probability of state of economy * Return given state of economy)

= (56% * 8%) + (12% * 25%) + (19% * -3%)

= 4.48% + 3% - 0.57%

= 6.91%

8 0
3 years ago
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