Business, 07.06.2020 00:04 alanisalvarez2000

On January 1, Year 1, the Timble Corporation (Timble) leases a piece of typical equipment to use for eight years. The equipment has an expected life of ten years and no anticipated salvage value. Timble has an incremental borrowing rate of 5%. Annual payments for this asset are $9,000 with the first payment to be made immediately. At the end of the eight years, Timble has the right to buy the asset for $10,000 in cash. This amount is expected to be significantly below the expected fair value of the equipment on that date so it is reasonable to expect Timble to pay this amount. Timble records depreciation based on the straight-line method and interest based on the effective rate method. The present value of an annuity due of $1 at 5% for eight years is assumed to be 6.80. The present value of an ordinary annuity of $1 at 5% for eight years is assumed to be 6.50. The present value of a single amount of $1 at 5% in eight years is assumed to be 0.66. What amount of depreciation expense should Timble record for Year 1

Answers

Answer from: bigboss3026

$6780

Explanation:

Asset recorded in books of timble will be:

= (PVAF at 5%, 8 × Annual CF) + (PVAF at 5%,8 × salvage)

where CF = cash flow

PVAF = present value of annuity factor

= (6.80 × 9000 ) +(0.66 × 10000)

= 61200+ 6600

= $ 67800

Since the equipment has an expected life of ten years with no anticipated salvage value, then the depreciation will be:

Depreciation = 67800 ÷ 10

= $ 6780

Answer from: Quest

answercombination of ability and experience of the partners;

Answer from: Quest

answera public company has access to more capital;

Other questions on the subject: Business

Business, 22.06.2019 09:40, natalie2sheffield

Catherine de bourgh has one child, anne, who is 18 years old at the end of the year. anne lived at home for seven months during the year before leaving home to attend state university for the rest of the year. during the year, anne earned $6,000 while working part time. catherine provided 80 percent of anne's support and anne provided the rest. which of the following statements regarding whether anne is catherine's qualifying child for the current year is correct? a. anne is a qualifying child of catherine. b.anne is not a qualifying child of catherine because she fails the gross income test. c.anne is not a qualifying child of catherine because she fails the residence test. d.anne is not a qualifying child of catherine because she fails the support test.

Answers: 2

continue

Business, 22.06.2019 13:40, moneytt2403

Computing equivalent units is especially important for: (a) goods that take a relatively short time to produce, such as plastic bottles. (b) goods with sustainability implications in their production processes. (c) goods that are started and completed during the same period. (d) goods that take a long time to produce, such as airplanes.

Answers: 2

continue

Business, 22.06.2019 15:20, amulets5239

Sauer food company has decided to buy a new computer system with an expected life of three years. the cost is $440,000. the company can borrow $440,000 for three years at 14 percent annual interest or for one year at 12 percent annual interest. assume interest is paid in full at the end of each year. a. how much would sauer food company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over (reborrowed) each year at the same 12 percent rate? compare this to the 14 percent three-year loan.

Answers: 3

continue

Business, 22.06.2019 16:40, editsa

Differentiate between the trait, behavioral, and results-based performance appraisal systems, providing an example where each would be most applicable.

Answers: 1

continue

You know the right answer?

On January 1, Year 1, the Timble Corporation (Timble) leases a piece of typical equipment to use for...