Depreciation Whatismeantbydepreciation Howdoesdepreciationaffectacompany'scashflow Statethedifferencebetweenbookdepreciationandtaxdepreciation Explain why the recovery period used for tax depreciation purposes may be different from theestimatednvalueinanengineeringeconomystudy Identifythedifferentmethodsfordeterminingdepreciationofassets 6 An asset that is book depreciated over a 5 year period by the straight line method has BV3 $62,000with a depreciation charge of $26,000 per year Determine (a) the first cost of the asset and (b) theassumedsalvagevalue 7 Bristol Myers Squibb purchased a tablet forming machine in 2008 for $750,000 The company plannedto use the machine for 10 years however, due to rapid obsolescence it will be retired after only 4 yearsin 2012 Develop a spreadsheet for depreciation and book value amounts necessary to answer thefollowing Whatistheamountofcapitalinvestmentremainingwhentheassetisprematurelyretired If the asset is sold at the end of 4 years for $175,000, what is the amount of capital investment lostbasedonstraightlinedepreciation If the new technology machine has an estimated cost of $300,000, how many more years should thecompany retain and depreciate the currently owned machine to make its book value and the first cost ofthenewmachineequaltoeachother 8 A 120 metric ton telescoping crane that cost $320,000 is owned by Upper State Power Salvage isestimated at $75,000 (a) Compare book values for MACRS and standard SL depreciation over a 7 yearrecoveryperiod (b)ExplainhowtheestimatedsalvageistreatedusingMACRS 9 Vesco Mineral Resources purchased mineral rights to land in the foothills of the Santa Cristomountains The cost of the purchase was $9 million Vesco originally thought that it would be able toextract 200,000 tons of lignite from the land, but further exploration revealed that 280,000 tons couldbe economically removed If the company sold 20,000 tons in year 1 and 30,000 tons in year 2, whatwouldthedepletionchargesbeeachyearaccording tothecostdepletionmethod

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Depreciation Whatismeantbydepreciation? Howdoesdepreciationaffectacompany'scashflow? Statethedifferencebetweenbookdepreciationandtaxdepreciation. Explain why the recovery period used for tax depreciation purposes may be different from theestimatednvalueinanengineeringeconomystudy. Identifythedifferentmethodsfordeterminingdepreciationofassets. 6. An asset that is

Depreciation

Whatismeantbydepreciation?
Howdoesdepreciationaffectacompany'scashflow?
Statethedifferencebetweenbookdepreciationandtaxdepreciation.
Explain why the recovery period used for tax depreciation purposes may be different from theestimatednvalueinanengineeringeconomystudy.
Identifythedifferentmethodsfordeterminingdepreciationofassets.

6. An asset that is book-depreciated over a 5-year period by the straight-line method has BV3 $62,000with a depreciation charge of $26,000 per year. Determine (a) the first cost of the asset and (b) theassumedsalvagevalue.

7. Bristol Myers Squibb purchased a tablet-forming machine in 2008 for $750,000. The company plannedto use the machine for 10 years; however, due to rapid obsolescence it will be retired after only 4 yearsin 2012. Develop a spreadsheet for depreciation and book value amounts necessary to answer thefollowing.

Whatistheamountofcapitalinvestmentremainingwhentheassetisprematurelyretired?
If the asset is sold at the end of 4 years for $175,000, what is the amount of capital investment lostbasedonstraightlinedepreciation?
If the new-technology machine has an estimated cost of $300,000, how many more years should thecompany retain and depreciate the currently owned machine to make its book value and the first cost ofthenewmachineequaltoeachother.

8. A 120-metric-ton telescoping crane that cost $320,000 is owned by Upper State Power. Salvage isestimated at $75,000. (a) Compare book values for MACRS and standard SL depreciation over a 7-yearrecoveryperiod.(b)ExplainhowtheestimatedsalvageistreatedusingMACRS.

9.Vesco Mineral Resources purchased mineral rights to land in the foothills of the Santa Cristomountains. The cost of the purchase was $9 million. Vesco originally thought that it would be able toextract 200,000 tons of lignite from the land, but further exploration revealed that 280,000 tons couldbe economically removed. If the company sold 20,000 tons in year 1 and 30,000 tons in year 2, whatwouldthedepletionchargesbeeachyearaccording tothecostdepletionmethod?