ORIE 350 lecture 8 - Acc. Depreciation 27,000 27,000...

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Unformatted text preview: Acc. Depreciation 27,000 27,000 Equipment 28,000 28,000 2 Apt corp forklift June 9, 2003 Cash 3000 Acc. Depreciation 27000 Equip 28000 Gain on Sale 2000 Cost= 1,500 Salvage 100 Jan 6, 2000 Useful life 7 years Sold on Jan 5, 2004 for $800 Straight line annual depreciation = 1500-100/ 7 = $200 per year June 30, 2000 $100 2001 $200 2002 200 2003 200 Jan 2004 100 Jan 5, 2004 Depreciation expense 100 Acc. Depreciation 100 Jan 5, 2004 Cash 800 Acc. Depreciation 800 Equip 1500 Gain on sale 100 Time value of money Money has a time value Money today is worth more than money one year from now 1. We could invest that money and earn interest 2. Inflation 3. Risk of non-payment Time value of money used for 1. Bonds 2. Leases Interest rates Way to deal with money given on an annual basis Simple interest- I= P x in, where P is the principle or the amount borrowed and i is the interest rate per year and n is the no of years I is the interest a fee charged for borrowing money...
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ORIE 350 lecture 8 - Acc. Depreciation 27,000 27,000...

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