2.What is the book value of the equipment after it has been owned for 1 full year. (hint use part 1)?3.What is the amount of depreciation for the first year if the company did notpurchase the equipment until July 1stand adopts the Straight-line method?4.What is the net book value of the equipment after it has been owned for 1 5/12years?

Part B:On 1/1/2015, Jabari, Inc. purchases a truck costing $30,000 with an expected useful life of 4 years or 120,000 miles and an expected residual value of $14,000 (after the 4 years orthe 120,000 miles).What is the depreciation expense for the truck during the year ended 12/31/2016 assuming Jabari uses the Double-declining Balance Method?What is the net book valueof the truck as of 1/1/2018 if Jabari uses the Units-of-Productionmethod for depreciation and drives the truck 45,000 miles during 2015; 25,000 miles during 2016; and 20,000 miles during 2017?Assume Jabari uses straight-line depreciationand sells the truck on 12/31/2016 for $20,500. What journal entry should Jabari record for the sale?

Present Value ExercisesPresent Value of a Single AmountAssume that today is January 1, 2017, and you have the opportunity to receive $1,000 cash on December 31, 2019. Assuming an interest rate of 10% per year, how much is the $1,000 payment worth to you as of January 1, 2017 (i.e., what is its present value)?Future Value (FV) = Interest rate per period (i)=Period in future (t) = We can work this out multiple ways:1.Use the formula for the present value of a single amount 2.Use the Present Value (PV) of $1 table (USE THIS METHOD FOR THE HOMEWORK / EXAMS)Present Value=PV of $1*FV=*=3.Use ExcelPresent Value=PV(rate, nper, pmt, fv, type)==Practice1.What is the present value of $50,000 received 20 years from now, assuming 9% interest?2.What is the present value of $3,000 received 5 years from now, assuming 20% interest?3.What is the present value of $3,000 received 5 years from now with 20% interest, compounded quarterly?Present Value=1*FV(1 + i)t=*=

Present Value of an AnnuityAssume you are to receive $1,000 cash on December 31 of 2017, 2018, and 2019. How much would these cash receipts be worth as of January 1, 2017, assuming an interest rate of 10%?Annuity Payment (A) = Interest rate per period (i) = Periods (n) = 1.Calculate the PV of a single amount for each of the three years using the PV of $1 tableYearPV of $1*FV1*=2*=3*=2.Use the Present Value (PV) of an Ordinary Annuity of $1 tablePresentValue=PV of anOrdinary Annuityof $1*A=*=3.Use ExcelPresent Value=PV(rate, nper, pmt, fv, type)==Practice1.What is the present value of a $50,000 annuity received over 20 years, assuming 9% interest?2.What is the present value of a $4,000 annuity received over 5 years, assuming 20% interest?

#### You've reached the end of your free preview.

Want to read all 33 pages?

- Fall '12
- MayYueZhang
- Financial Accounting, Depreciation, Interest Rates, 1981, 1986, 1990