1. Mergeron Industries purchases a new delivery van. The van costs $32,000 and is expected to last 5 years. The company uses straight-line depreciation for accounting purposes. The residual value is expected to be $2,000. The summary rate is 30%. Calculate the deferred tax liability for year two of owning this van (ignore the half year rule). (place answer in the space below without a $ sign)

2. 

Duval Industries purchases $110,000 of machinery on January 1, 2020. The machinery is expected to have a 5 year useful life and a residual value of $10,000. On January 1, 2023, management determines that the equipment will last for an additional 2 years and the new residual value is $6,000. Duval uses straight-line depreciation and has a calendar year end.

 

Instructions

Calculate the 2023 depreciation expense related to this piece of machinery (place answer in space below without $ sign)

3. 

Pendulum Enterprises has a defined benefit plan. Employees receive a pension equal to 2% of the average of the highest 5 years of salary and based on years of service. On December 31 2020, the fair value of the pension assets in the plan is $10.7 M, although pension contributions were in excess of $12.5 M, and the estimated pension obligation is $12.3M.

 

Mary-Lou is considering retirement but wants to know how much she is entitled to receive under this defined benefit plan. Her 5 years highest average earnings are $67,500 and she has 30 years of service. What is her annual pension benefit? (place value without a $ sign in the space below)

4.  

Duval Industries purchases $110,000 of machinery on January 1, 2020. The machinery is expected to have a 5 year useful life and a residual value of $10,000. On January 1, 2023, management determines that the equipment will last for an additional 2 years and the new residual value is $6,000. Duval uses straight-line depreciation and has a calendar year end.

 

Instructions

Calculate the carrying value of the machinery on December 31, 2023. (place answer without $ sign in space below)