Final
exam
sheet
cheat
Depreciation & yr 1:costof the
$10,000
x
·
asset. 100%
=
costofequipmentdepreciato
Bookvalue endo fyuI:
Since bookvalue
then
is & yr
Section
expensing:Assuming
179
1,600,000
$16,000
one
100%
sec. 179 limit
is
$1,050,000
1,050,000 $550,000
=
-
Bonus depreciation & 100%
·
$550,000
-
$550,000
1.2014:$150,000.50% $75,000
=
0
=
b. 2018:$150,000. 100% $150,000
=
I
the value for yo 2 is also
$ 120,000
C.2024:$150,000.80%:
O
D. 2026:$150,000. 20% $30,000
=
is used.
bonus depreciation
·
straightline depreciation
SLD
costsalvage value
76,000-0
5 yrs
Doubling Declining
beginning
ofyo
4th year $150,000
-
-
=
$30,400
($150,000 (2/10) (3))
z
$90,000
$30,400 $45,600
=
Book
Time 3
value:$45,600
=
Bookvalue
$18,240: $27,360
-
(2/5) (27,360) $10,944
Book value:$27,360
10,944 $16,416
(2/s(9849.60)
=
=
yr2:24.49%
$9,849.30
yr3:
=
-
17.49%
S25,000
-
$104,000 $46,000
Salvage value) (Dep.rale)
-
gain!
capital
15k S K
=
-
loss
& s,60,000
then
=
selling
any
gain
since
will
be
bookvalue
a
capital
will be 0.
Depreciation expense for the 4th yr
=(150,000 15000) (12.49) $17,362.SO
=
-
=
5k)(14.29 24.419
y57:8.73%
10000Bonusdeprecationen 10
xrS+ beyond:4.46%
=
endof 8th year:
cost-salvagevalue) * (sum of ally rates
125 8.93% en
$3939.84 $5,909.76
&
He
y24 12.49%
$ 3,939.84
=
Book value:$9,849.60
·
=
Dep.exp (Assetc ost
yr1:14.29%
=
Book value:$16,416-$6,566.40
Time S
year $150,000
20,000
=
=
Time 4 (2/5) (16,416) $6,566.48
=
8th
end of
MACRS
=
=
-
&
(10,000.3)
-
cor-or-norcapitalgainnation
-
=
@
20k
gold
Oh year(Assetc ost salvage value) Bookvalue & Beginning
(150,000 15,000. ($150,000 (2110) (7) $104,000
(2/5) (45,600 $18,240
=
$50,000
:
& S15000
=
-
Time
value in 2021
20K-152 =Skcapital
Sold
=
=
Bookvalue:$76,000
Sold
Depreciation
Balance
Double Declining
(2/useful life) (2/10)
=
:
sth yr:$13500 (s) $108,000
·
Depreciation / year
5 10,000
Asset
i n 2019 $50,000
Asset
=
Balance Depreciation
76,000
depreciation
<S1150,000-$15,000-$13Ne
$15,200 per yr
=
=
$50,000
=
DDBD useful life. Bookvalue &
Time O $76,000
Time 1 2/5
Straight-line
Useful life: 5 time
Useful life
=
-
·
Cost:$76,000
salvage value.SO
+
& end
Bookvalue
4.46) $101,212.50
=
....
+
8 th
of
r
$48,787.50
$150,000 $101,212.50
=
-
BOOKVO
a
Asset
(150k
state taxable income:S275,000
w
-
1
taxrate 9.6%
=
au.s, 275,000 (9.6%)
Federal taxable income $175,000 $264,000 3,248,000
=
=
manuman's 275,000 + 0.39(248,600
100,000
rate
State tax
=
9.6%
=
federal rate (1
0.21(1
+
-
=
25000
+
(80,204
0.096) 0.28884
7000
2
Total state federal tax.
3,264,000+ s,soe
=
state tax
$26,400
=
Before-tax
wor th:
present
combinedincremental state federal income tax rate
-
14,000
8000
8000(P/5,1500s
+
+
3000
3.352
(P/FI/5%,s
$27
=
return
Before-tax
r ate of
rate)
i 20%, PW
=
=
-
25,000
28.584%
=
i 25%, PW
=
=
-
25000
8000(P/Ai(7000s
+
8000(P/5,/010,5
+
+
6000(PIF
3000(4/7,
+
20%
+
9%339770521.8
+
0.223
=
2500,
5
$13
=
=-
$1521.8
0.3277
2.689
RRB =
,2000S
22.3%
=
B
Loan 550,000
v alue
Present
=
additional
of
int.rat 15%/0
loan
payment:PV/15%,
=
Gross loan to
4 eg. annual payments
combined tax rate:18%
be
taken:(50,000 2141.23) (1
+
.8
+
47S000
S,2,141.23
=
355,469.39
=
3,19,429.01
eq. annual paymentagainstloan:PMT (15%, 4, -55,469.39,0
18.12%
effective loan rate:Rate (419429.01, -(50000 2141.23), 0)
=
=
+
After tax
loan:18.12%
of
cost
(1 40%) 13.046%
=
-
Depreciation Accumulated
yo
Basis
%
11M33.33
Expense
Depreciation
EndingbookDepresentation expense.
value
3333,3003333,3003666.700
yr1
40%
$133,320
=
yV2 $177,800
=
yr3 $59,240
=
Annual Pre-taxprofit =$700,000 5,200,000 3,500,000
-
=
10.3) 5300,000
Annual post-taxprofit $500,000
=
:
:
=
2
I M
44.45S444,500
3
In
1481
5148,100
$175,000
S777,800
3222,200
salvage value
3,925,900
s74,100
Boouvalves--A8 74,100)(0.4)
=
-
40,360
=
123,00800
30reta
M
·
SL depreciation
=
#000 90x
=
-
7300t 42%
=
MARRAfter
245000
After taxpresentworth
Pw
=
Fc
-
$3,750
=
12%
=
ax
+
cost
f irst
of
45000
3780(P/A,12%,5)
+
$ 31,374
3.6048
-
=
PW savings
1
15,700
=
0.42(*(, 12%, 5
$32,825
=
PUsalvage 5000(1-0.42)(P/F, 12%, 5)
=
$1646
=
PW
=
31374 32875 1646
+
+
$3097positive
=
value means
company
has
hit the 12%
least
at
Marr