L17_ECE4001_Spring_2011

L17_ECE4001_Spring_2011 - Salvage Value Lecture 17 Related...

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1 Slide #1 ECE 4001 L17 T. Michaels © 2011 Lecture 17 Related Economic Issues Slide #2 ECE 4001 L17 T. Michaels © 2011 Salvage Value Salvage Value = Estimated (actual) value of an item at the end of it’s useful life - Cost necessary to dispose of the item Slide #3 ECE 4001 L17 T. Michaels © 2011 Taxes Taxable Income = Total Income - Operating Expenses - Depreciation Depreciation is the decrease in “book” value of a capital equipment item and is deductible as a business expense. Value Market Value Book Slide #4 ECE 4001 L17 T. Michaels © 2011 Depreciation of Equipment • Straight line • Sum-of-years Digits • Accelerated Cost Recovery System (ACRS) • Modified Accelerated Cost Recovery System (MACRS)
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2 Slide #5 ECE 4001 L17 T. Michaels © 2011 Depreciation of Equipment When Salvage Value is Considered Total Depreciation = Purchase price - Salvage value Total depreciation amount Initial cost of capital equipment Salvage value D C S D C S = - = = = Slide #6 ECE 4001 L17 T. Michaels
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L17_ECE4001_Spring_2011 - Salvage Value Lecture 17 Related...

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