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a. Since the dish machine has a seven-year class life, why is it depreciated over eight years? Answer: b. Why are the depreciation percentages more
a. Since the dish machine has a seven-year class life, why is it depreciated over eight years? Answer: b. Why are the depreciation percentages more during the first four years than the last four years? Answer: c. If Mahnoor were going to sell the dish machine for a salvage value instead of depreciating it fully, how would this change her depreciation calculations? Answer: d. If Mahnoor sold the dish machine before it was fully depreciation for less than her purchase price, would this represent a capital gain or a capital loss? How would this affect her taxes? Answer: e. Assume that Mahnoor's operation is subject to a 30% tax on profits. What will be Mahnoor's tax savings over the eight-year period for which she will depreciate the dish machine? Answer: f. Based on the above question, what percentage of the dish machine's total purchase price could be considered to have been "paid for" by tax savings? Explain your
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