Marguerite's Florist is considering the purchase of a new delivery van. It will cost $25,000 plus another $3,000 to have it painted in the company's characteristic floral motif
The van will be depreciated over 5 years using MACRS percentages and a half year convention. Compute depreciation for the second year in the life of the van.
Answer: For depreciation purposes, the cost of the asset includes repainting, so the base is $25,000 + $3,000) = $28,000. The second year rate 32% so depreciation will be $28,000 × .32 = $8,960.
You might also like to view...
Jetson Corporation Jetson Corporation reported the following information for the year ended December 31, 2012. Revenue $14,000,000 Expenses 11,500,000 Dividends 1,000,000 Retained earnings at December 31, 2012 1,750,000 Refer to the selected information provided for Jetson Corporation. What was the retained earnings balance on December 31, 2011?
A) $ 250,000 B) $2,500,000 C) $1,500,000 D) $ 350,000
A challenging assignment given to a knowledgeable and skillful person would be likely to trigger an intense positive mood.
Answer the following statement true (T) or false (F)
Which of the statements below describes the IRR decision criterion?
A) The decision criterion is to accept a project if the IRR falls below the desired or required return rate. B) The decision criterion is to reject a project if the IRR exceeds the desired or required return rate. C) The decision criterion is to accept a project if the IRR exceeds the desired or required return rate. D) The decision criterion is to accept a project if the NPV is positive.
In 1999, the Drugs-R-Us began testing its new drug, Reduceo, a medicine to help people lose weight. Tests looked promising and, in 2006, the company applied to the FDA for approval to market Reduceo as a prescription drug. In March 2009, the FDA granted Drug-R-Us approval to market Reduceo. Reduceo was sold with some "diet enhancing" cookies that contained no drugs but were claimed to help
dieting with Reduceo. Frank saw an ad for the new drug. The Reduceo ad stated that it was a "wonder drug" and "tests prove it is the safest weight reduction drug on the market today!" Frank was interested and made an appointment to see his doctor. Frank's physician prescribed the new drug for his patient. Frank had no success using other weight-loss drugs, and dieting and exercise seemed ineffective. Frank took Reduceo from June until the end of August and lost 25 lbs. He also ate Reduceo's cookies. He was delighted with his weight loss, but was concerned because dots appeared before his eyes, causing disorientation. One day, the dots appeared before Frank's eyes while he was driving. He became disoriented and hit a tree and was seriously injured. He sued Drugs-R-Us, alleging negligence in manufacturing and inadequate warning of possible effects, as well as for deceptive advertising. Drugs-R-Us claims in its advertising that "tests prove" the cookies help lose weight. To avoid a charge of deceptive advertising, Drugs-R-Us must show that: a. the cookies were safer than any other weight loss drug now used b. the cookies were more effective than any other weight loss cookie c. the company has evidence that provides a reasonable basis for its claims d. the government can substantiate its claims e. the public is aware that such claims are meaningless