a. ROI before disposal b. ROI after disposal c. Residual income before disposal d. Residual income after disposal % do do %
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- Exercise 14-43 (Algo) Impact of an Asset Disposal on Performance Measures (LO 14-2, 3) Veach Division has total assets (net of accumulated depreciation) of $462,000 at the beginning of year 1. One of the assets is a machine that has a net book value of $43,260. Expected divisional income in year 1 is $55,440 including $2,940 in income generated by the machine (after depreciation). Veach's cost of capital is 10 percent. Veach is considering disposing of the asset today (the beginning of year 1). Required: a. Veach computes ROI using beginning-of-the-year net assets. What will the divisional ROI be for year 1 assuming Veach retains the asset? b. What would divisional ROI be for year 1 assuming Veach disposes of the asset for its book value and there is no gain or loss on the Note: Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1). sale? c. Veach computes residual income using beginning-of-the-year net assets. What will the divisional residual income be for year 1…Normandy Instruments invests heavily in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage investment in R&D, Normandy evaluates its division managers using EVA. The company adjusts accounting income for R&D expenditures by assuming these expenditures create assets with a two-year life. That is, the R&D expenditures are capitalized and then amortized over two years. Aerospace Division of Normandy shows after-tax income of $18.012 million for year 2. R&D expenditures in year 1 amounted to $7.212 million and in year 2, R&D expenditures were $12.012 million. For purposes of computing EVA, Normandy assumes all R&D expenditures are made uniformly over the year. Before adjusting for R&D, Aerospace Division shows assets of $72.012 million at the beginning of year 2 and current liabilities of $1,512,000. Normandy computes EVA using divisional investment at the beginning of the year and a 12 percent…The plant and equipment account in the records of a company for the year ended 31 December 20X6 is shown below. PLANT AND EQUIPMENT - COST 20X6 $ 20X6 $ 1 Jan Balance 960,000 1 July Cash 48,000 30 Sept Transfer disposal account 84,000 31 Dec Balance 924,000 1,008,000 1,008,000 The company's policy is to charge depreciation on the straight line basis at 20% per year, with proportionate depreciation in the years of purchase and sale. What should be the charge for depreciation in the company's statement of profit or loss for the year ended 31 December 20X6? A $184,800 B $192,600 C $191,400 D $184,200
- The plant and equipment account in the records of a company for the year ended 31 December 20X6 is shown below. PLANT AND EQUIPMENT - COST 20X6 $ 20X6 $ 1 Jan Balance 960,000 1 July Cash 48,000 30 Sept Transfer disposal account 84,000 31 Dec Balance 924,000 1,008,000 1,008,000 The company's policy is to charge depreciation on the straight line basis at 20% per year, with proportionate depreciation in the years of purchase and sale. What should be the charge for depreciation in the company's statement of profit or loss for the year ended 31 December 20X6?Depreciation by units-of-activity method Prior to adjustment at the end of the year, the balance in Trucks is $415,000 and the balance in Accumulated Depreciation-Trucks is $124,000. Details of the subsidiary ledger are as follows: Truck No. 1 2 3 4 Truck No. 1 2 3 Total Cost Feedback $77,000 119,000 94,000 125,000 Estimated Residual Value $11,550 14,280 13,160 15,000 a. Determine for each truck the depreciation rate per mile and the amount to be credited to the accumulated depreciation section of each subsidiary account for the miles operated during the current year. Keep in mind that the depreciation taken cannot reduce the book value of the truck below its residual value. Round the rate per mile to two decimal places. Enter all values as positive amounts. 0.28 0.26 ✔ 0.37 ✔ Estimated Useful Life Rate per Mile (in cents) Miles Operated 0.28 ✓ 230,000 miles 400,000 miles 220,000 miles 390,000 miles 34,500 40,000 22,000 46,800 Accumulated Depreciation at Beginning of Year $23,800…Exercise 14-45 (Algo) Compare Historical Cost, Net Book Value to Gross Book Value (LO 14-2, 5) The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $39.5 million and having a four-year expected life, after which the assets can be salvaged for $7.9 million. In addition, the division has $39.5 million in assets that are not depreciable. After four years, the division will have $39.5 million available from these non depreciable assets. This means that the division has invested $79 million in assets with a salvage value of $47.4 million. Annual operating cash flows are $12.7 million. In computing ROI, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value for each year. Note: Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.10).…
- Assume the following PPE: Cost Residual Value Est. Useful Life (years) Building 10,000,000 500,000 20 Machinery 5,000,000 200,000 10 Delivery Equipment 2,000,000 200,000 5 Office Equipment 400,000 - 5 14. Using composite method, compute the composite life in years. Round off to two decimal places. Ex: 12.3415. Compute the composite depreciation rate. Round off to two decimal places. Ex.:12.34%16. How much is the annual depreciation as per table?17. Give the entry to record sale of delivery equipment at the end of the 4th year for P70,000.18. How much is the depreciation for the 5th year? (Use the rounded off rate)19. How much is the depreciation for the 5th year assuming a new delivery equipment is purchased for P2,200,000 at the beginning of the 5th year? (Use the rounded off rate) NOTE: SUBPARTS 17-19 ONLYAssume the following PPE: Cost Residual Value Est. Useful Life (years) Building 10,000,000 500,000 20 Machinery 5,000,000 200,000 10 Delivery Equipment 2,000,000 200,000 5 Office Equipment 400,000 - 5 14. Using composite method, compute the composite life in years. Round off to two decimal places. Ex: 12.3415. Compute the composite depreciation rate. Round off to two decimal places. Ex.:12.34%16. How much is the annual depreciation as per table?17. Give the entry to record sale of delivery equipment at the end of the 4th year for P70,000.18. How much is the depreciation for the 5th year? (Use the rounded off rate)19. How much is the depreciation for the 5th year assuming a new delivery equipment is purchased for P2,200,000 at the beginning of the 5th year? (Use the rounded off rate)18).from the following facts,for the units produced depreciation what is given cost - $40,000 residual value - $5,000 est total units produced for useful life calculation - $100,00 units produced per year: year 1 -20,000 year 2- 15,000 year 3- 25,000 year 4- 32,000 year 5- 17,000 year 6 - 15,000 required; total accumulated depreciation at end of year 4
- rior to adjustment at the end of the year, the balance in Trucks is $423,500 and the balance in Accumulated Depreciation-Trucks is $127,800. Details of the subsidiary ledger are as follows: Accumulated Miles Estimated Estimated Depreclation at Beginning Operated During Truck Residual Useful No. Cost Value Life of Year Year $86,000 $12,900 220,000 miles 33,000 miles 21 114,500 13,740 240,000 $22,900 24,000 3 100,500 14,070 216,000 80,400 21,600 4 122,500 14,700 410,000 24,500 49,200 a. Determine for each truck the depreciation rate per mile and the amount to be credited to the accumulated depreciation section of each subsidiary account for the miles operated during the current year. Keep in mind that the depreciation taken cannot reduce the book value of the truck below its residual value. Round the rate per mile to two decimal places. Credit to Rate per Mile Miles Accumulated Truck No. (In cents) Operated Depreclation 1. S. 33,000 2. 24,000 21,600 4. 49,200 Total S. 3.Prior to adjustment at the end of the year, the balance in Trucks is $403,000 and the balance in Accumulated Depreciation—Trucks is $120,400. Details of the subsidiary ledger are as follows: TruckNo. Cost EstimatedResidualValue EstimatedUsefulLife AccumulatedDepreciationat Beginningof Year MilesOperatedDuringYear 1 $84,500 $12,675 220,000 miles — 33,000 miles 2 119,000 14,280 360,000 $23,800 36,000 3 94,500 13,230 210,000 $75,600 21,000 4 105,000 12,600 340,000 $21,000 40,800 a. Determine for each truck the depreciation rate per mile and the amount to be credited to the accumulated depreciation section of each subsidiary account for the miles operated during the current year. Keep in mind that the depreciation taken cannot reduce the book value of the truck below its residual value. Round the rate per mile to two decimal places. Enter all values as positive amounts. Truck No. Rate per Mile(in cents)…from the following facts,for the units produced depreciation what is given cost - $40,000 residual value - $5,000 est total units produced for useful life calculation - $100,00 units produced per year: year 1 -20,000 year 2- 15,000 year 3- 25,000 year 4- 32,000 year 5- 17,000 year 6 - 15,000 required; number of years the equipment is depreciated