PS 13 - Depreciation and Income Taxes

PS 13 - Depreciation and Income Taxes - b DB 100 Method c...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
IE 150 Problem Set 13 Depreciation and Income Taxes Instructions:  Write/Type/Print your answers on yellow pad or bond paper (NO A4’s). Use a different sheet per  problem.  Use phrases  to describe what you are doing. Do not present it as just a series of equations and  numbers.  Label each step. Ex: “Step 1: Set-up the Total Revenue Equation”, “Step 4: Solve for the NPV”.  Box the final answers.  Use clear formatting: Indent at each step. Show your answers in just 1 column. (The problem set  will be read from top to bottom, and not top bottom diagonal right bottom.) Problem 1:  An asset with a useful life of 8 years was purchased for PhP 150,000. Depreciate the asset using:  a) Straight Line Method
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: b) DB 100% Method c) DB 150% Method d) DB 200% Method Problem 2: Why would you rather depreciate an asset earlier rather than later? Problem 3: Two alternative machines will produce the same product, but one is capable of higher quality work, which can be expected to return greater revenue. The following are the relevant data: A B First Cost ($) 20,000 30,000 Life (yrs) 12 8 Terminal BV ($) Market Value ($) 4,000 Annual Receipts ($) 150,000 188,000 Annual Expenses ($) 138,000 170,000 Determine the better alternative assuming “repeatability” and based on the SL depreciation at an income tax of 35%. Also assume that MARR (after tax) is 10%. (Show the tax tables)....
View Full Document

This note was uploaded on 09/23/2011 for the course IE 151 taught by Professor J3patino during the Spring '11 term at University of the Philippines Diliman.

Ask a homework question - tutors are online