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Suncoast Food Centers has provided the following information with regard to the purchase of equipment. Acquisition cost of equipment $ 640,000 Useful life 5 years
Suncoast Food Centers has provided the following information with regard to the purchase of equipment.
Acquisition cost of equipment | $ | 640,000 | |
Useful life | 5 | years | |
Salvage value at end of useful life | 0 | ||
Annual straight-line depreciation | $ | 128,000 | |
Annual income generated by asset (before deducting depreciation) | $ | 192,000 | |
Use a 10 percent rate to compute the imputed interest charge. Required: Complete the following table.
\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Year } & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{l} Income Before \\ Depreciation \end{tabular}}} & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{c} Annual \\ Depreciation \end{tabular}}} & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{l} Income Net of \\ Depreciation \end{tabular}}} & \multicolumn{3}{|c|}{ Based on Net Book Value } & \multicolumn{3}{|c|}{ Based on Gross Book Value } \\ \hline & & & & & & & \begin{tabular}{c} Average Net Book \\ Value \end{tabular} & \begin{tabular}{c} Imputed Interest \\ Charge \end{tabular} & Residual Income & \begin{tabular}{c} Average Gross \\ Book Value \end{tabular} & \begin{tabular}{c} Imputed Interest \\ Charge \end{tabular} & \begin{tabular}{c} Residual \\ Income \end{tabular} \\ \hline 1 & $ & 192,000 & $ & 128,000 & $ & 640,000 & & & & & & \\ \hline 2 & & 192,000 & & 128,000 & & 640,000 & & & & & & \\ \hline 3 & & 192,000 & & 128,000 & & 640,000 & & & & & & \\ \hline 4 & & 192,000 & & 128,000 & & 640,000 & & & & & & \\ \hline 5 & & 192,000 & & 128,000 & & 640,000 & & & & & & \\ \hline \end{tabular}Step by Step Solution
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