Answer:
initial accounting cost of the machine = $32016
Explanation:
given data
Gross invoice price = $27,200
Sales tax = 1,760
Cash discount = 544
Freight = 960
Assembly of machine = 800
Installation of machine = 1,200
Repair of machine = 2,560
Tuning and adjusting machine = 640
to find out
initial accounting cost of the machine
solution
we get here initial accounting cost of the machine that is express as
initial accounting cost of the machine = Gross invoice price + Sales tax - Cash discount+ Freight+ Assembly of machine + Installation of machine + Tuning and adjusting machine ...................1
put here value we get
initial accounting cost of the machine = $27,200 + 1,760 - 544 + 960 + 800 + 1200 + 640
initial accounting cost of the machine = $32016
Amount = $10000
Let us assume the principal = x
Amount of interest = 5%
Time = 5 years
Then
x (1 + i)^t = 10000
x(1 + 0.05)^5 = 10000
x(1.05)^5 = 10000
1.28x = 10000
x = 10000/1.276281
= 7835.26
From the above deduction, it can be easily concluded that the correct option among all the options that are given in the question is the second option or option "B".
Answer:
1. Compute the annual depreciation expense prior to the change in estimates.
annual depreciation = ($396,000 - $36,000) / 50 = $7,200 per year
2. Compute the annual depreciation expense after the change in estimates.
annual depreciation = ($324,000 - $30,000) / 20 = $14,700 per year
3. What will be the net effect of changing estimates on the balance sheet, net income, and cash flows for the year?
Any changes in an asset's useful life are reported prospectively, this means that they do not affect any past records, only future records are affected. In this case, the depreciation expense per year will increase form $7,200 to $14,700, so net income will be negatively affected by it. Cash flows will not be affected, since depreciation expense is a non-cash expense. P,P&E on the balance sheet will be affected because the net value of the building will decrease faster.
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