At the beginning of the fiscal year, G&J Company acquired new equipmentat a cost of $100,000. The equipment has an estimated life of five years and an estimated salvage value of $10,000.(a) Determine the annual depreciation (for financial reporting) for each of the five years of the estimated useful life of the equipment, the accumulated depreciation at the end of each year, and the book value of the equipment al the end of each year by using (1) the straight-line method and (2) the double-declining-balance method.(b) Determine the annual depreciation for tax purposes, assuming that theequipment falls into the seven-year MACRS property class.(c) Assume that the equipment was depreciated under MACRS for a seven-year property class. In the first month of the fourth year, the equipment was traded in for similar equipment priced at $112,000. The trade·fo allowance on the old equipment was $20,000, and cash was paid for the balance. What is the cost basis of the new equipment for computing the amount of depreciation for income-tax purposes'?
At the beginning of the fiscal year, G&J Company acquired new equipment
at a cost of $100,000. The equipment has an estimated life of five years and an estimated salvage value of $10,000.
(a) Determine the annual depreciation (for financial reporting) for each of the five years of the estimated useful life of the equipment, the
(b) Determine the annual depreciation for tax purposes, assuming that the
equipment falls into the seven-year MACRS property class.
(c) Assume that the equipment was
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 5 images
