Reference no: EM131121870
Depreciation-SL, DDB, SYD, Act., and MACRS On January 1, 2009, Locke Company, a small machine-tool manufacturer, acquired for $1,260,000 a piece of new industrial equipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $60,000. Locke estimates that the new equipment can produce 12,000 machine tools in its first year. It estimates that production will decline by 1,000 units per year over the remaining useful life of the equipment.
The following depreciation methods may be used:
(1) straight-line; (2) double-declining-balance; (3) sum-of-the-years'-digits; and (4) units-of-output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation.
(a) Which depreciation method would maximize net income for financial statement reporting for the 3-year period ending December 31, 2011? Prepare a schedule showing the amount of accumulated depreciation at December 31, 2011, under the method selected. Ignore present value, income tax, and deferred income tax considerations.
(b) Which depreciation method (MACRS or optional straight-line) would minimize net income for income tax reporting for the 3-year period ending December 31, 2011? Determine the amount of accumulated depreciation at December 31, 2011. Ignore present value considerations.
(AICPA adapted)
|
Duality gap of the knapsack problem
: (Duality Gap of the Knapsack Problem) Given objects i = 1,...,n with positive weights wi and values vi, we want to assemble a subset of the objects so that the sum of the weights of the subset does not exceed a given T > 0, and the sum of the valu..
|
|
Determine eoq for shoelaces annual inventory costs of policy
: Annual inventory carrying costs average 15 percent of the inventory value. Assuming that the shoelace manufacturer is located nearby and that orders are filled on the same day they are placed (that is, virtually instantaneously), determine the follow..
|
|
Under the current manufacturing process
: Under the current manufacturing process, the proportion of computer chips that are defective is 0.4 and a new process is claimed to reduce that proportion. It is desired to test this claim statistically. n = 20, and X defined there.
|
|
Constraint relaxation and lagrangian relaxation
: (Constraint Relaxation and Lagrangian Relaxation) The purpose of this exercise is to compare the lower bounds obtained by relaxing integer constraints and by dualizing the side constraints. Consider the nonlinear network optimization problem with ..
|
|
Determine the amount of accumulated depreciation
: Which depreciation method (MACRS or optional straight-line) would minimize net income for income tax reporting for the 3-year period ending December 31, 2011? Determine the amount of accumulated depreciation at December 31, 2011. Ignore present value..
|
|
Lagrangian relaxation in multidimensional assignment
: Lagrangian Relaxation in Multidimensional Assignment) Apply the Lagrangian relaxation method to the multidimensional assignment problem of Example 10.7, in a way that requires the solution of 2-dimensional assignment problems. Derive the form of ..
|
|
Obtained achieves the optimal cost of the original problem
: Enforced Separation in 3-Dimensional Assignment) Consider the 3-dimensional assignment problem of Example 10.7 that involves a set of jobs J, a set of machines M, and a set of workers W.
|
|
Compute the annual depreciation charges over the machine
: Compute the annual depreciation charges over the machine's life assuming a December 31 yearend for each of the following depreciation methods.
|
|
Determine the net effect of this plan on blawnox pretax
: The firm's variable cost ratio is 70 percent, and its required pretax rate of return on current assets investments is 18 percent. The company also expects its inventory investment to decrease by $1 million due to the anticipated decrease in sales. De..
|