Answer:
The straight line depreciation for the first year is $24000
Explanation:
The straight line method of depreciation charges/allocates a constant amount of depreciation through out the useful life of the asset. The straight line depreciation expense for the year is calculated as follows,
Straight line depreciation = (Cost - Salvage Value) / Estimated useful life
Straight line depreciation = (135000 - 15000) / 5 = $24000 per year
Thus, the amount of depreciation for first year under straight line method is $24000
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Answer:The new machinery must be depreciated using the same method as the previously purchased Machinery.
Explanation:
This is in line with the consistent concept which states a company must be consistent in the application of accounting principles to his activities.
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Answer:
B. Choose investment A
Explanation:
Looking at the investment cash flows for the four years, investment A maximises the shareholders wealth mostly because it covers cost of investment quicker than other investments B, C and D. It begins with the highest cash flow return, for first and second year therefore pay back period is lower with investment A. Also net present value is higher.
