Chapter 08 Homework1

# Chapter 08 Homework1 - \$205,833.34 P3 1 Year Straight-Line...

This preview shows pages 1–2. Sign up to view the full content.

Professor Smith ACCT151 6 November 2008 Chapter 8 Homework 1 E1,E2,P3,P8 E1) \$60,000.00 Purchase Price (1,200.00) Purchase Discount 1,000.00 Freight Costs 2,500.00 Government Pollution Requirements 6,000.00 Architect Fees \$68,300.00 Acquisition Cost E2) 1) \$520,000.00 Purchase Price 200,000.00 Value of Land 150,000.00 Value of Building 250,000.00 Value of Equipment \$600,000.00 Total Value of Individual Assets \$520,000 x (\$200,000) / (\$600,000) = \$173,333.33 \$520,000 x (\$150,000) / (\$600,000) = \$130,000.00 \$520,000 x (\$250,000) / (\$600,000) = \$216,666.67 \$520,000.00 Land \$173,333.33 Building \$130,000.00 Equipment \$216,666.67 Cash \$520,000.00 2) Building \$130,000.00 / 20 = \$6500.00 Equipment \$216,666.67 / 20 = \$10,833.33 3) Plant, Property, and Equipment Land \$173,333.33 Building, Net \$123,500.00 Equipment, Net

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: \$205,833.34 P3) 1) Year Straight-Line MACRS Difference 1. \$5,600.00 \$ 6,720.00 \$(1,120.00) 2 5,600.00 10,750.00 (5,150.00) 3 5,600.00 6,450.00 (850.00) 4 5,600.00 3,870.00 1,730.00 5 5,600.00 3,870.00 1,730.00 6 5,600.00 1,940.00 3,660.00 2) The total depreciation is the same using both methods. However, straight-line depreciation makes net income higher, while MACRS makes net income lower. A lower net income means the company pays less income tax P8) 1) 2007: \$14,000.00 2008: \$13,034.48 2) They would have preferred to expense the new equipment but could not because the government mandated the installation. 3) Gain on Sale: \$58,293.10 Gain on Sale (Equipment Expensed): \$56,482.76 \$ 1,810.34...
View Full Document

## This note was uploaded on 02/22/2009 for the course ACCT 151 taught by Professor Largay during the Spring '07 term at Lehigh University .

### Page1 / 2

Chapter 08 Homework1 - \$205,833.34 P3 1 Year Straight-Line...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online