Chapter 08 Homework1

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

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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
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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...
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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 .

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

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