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Suncoast Food Centers has provided the following information with regard to the purchase of equipment. Acquisition cost of equipment $840,000 Useful life 5 years Salvage

Suncoast Food Centers has provided the following information with regard to the purchase of equipment.

Acquisition cost of equipment $840,000
Useful life 5 years
Salvage value at end of useful life 0
Annual straight-line depreciation $168,000
Annual income generated by asset (before deducting depreciation) $252,000

Use a 10 percent rate to compute the imputed interest charge.

Complete the following table.

Based on Net Book Value Based on Gross Book Value
Year Income Before Depreciation Annual Depreciation Income Net of Depreciation Average Net Book Value Imputed Interest Charge Residual Income Average Gross Book Value Imputed Interest Charge Residual Income
1 $252,000 $168,000 $84,000 $168,000
2 252,000 168,000 84,000
3 252,000 168,000 84,000
4 252,000 168,000 84,000
5 252,000 168,000 84,000 84,000

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