In March 2021, Tamara Mines Co. purchased a coal mine for $6,000,000. Removable coal is estimated at 1,500,000 tons. Tamara is required to restore the land at an estimated cost of $720,000, and the land should have a value of $630,000. The company incurred $1,500,000 of development costs preparing the mine for production. During 2021, 450,000 tons were removed, and 300,000 tons were sold. The total amount of depletion that Tamara should record for 2021 is (give the journal entry)
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- On March 17, 2013, the Wildcat Oil Company began operations at its Louisiana oil field. Theoil field had been acquired several years earlier ata cost of $32.5 million. The field is estimated tocontain 6.5 million barrels of oil and to have a salvage value of $3 million both before and after all ofthe oil is pumped out. Equipment costing $480,000was purchased for use at the oil field. The equipment will have no economic usefulness once theLouisiana field is depleted; therefore, it is depreciated on a units-of-production method. In addition,Wildcat Oil built a pipeline at a cost of $2,880,000to serve the Louisiana field. Although this pipelineis physically capable of being used for many years,its economic usefulness is limited to the productivelife of the Louisiana field; therefore, the pipelinehas no salvage value. Depreciation of the pipelineis based on the estimated number of barrels of oil tobe produced. Production at the Louisiana oil fieldamounted to 420,000 barrels in 2015 and…uppose that you purchased a HVAC system five years ago for $75, 000. The O&Mcosts are $15, 000 this year and are expected to increase by $1, 000 each year for the next five yearsthen remain the same for the following years.The current salvage value of the system is $15, 000; salvage value after one year is estimated tobe $12, 000; after two years, $11, 000; after three years, $10, 000; after four years, $9, 000; and so on.A new industrial HVAC system is available for purchase at a price of $95, 000, including instal-lation. The market value of the new system will decrease at a rate of 15% each year. The O&Mcosts are expected to be $1, 000 in the first year, and will increase at a rate of 20% each year. Themaximum service life of the new system is 10 years. Assume that your company uses an interestrate of 10% for all project evaluations.(a) Find the remaining economic life of the currently owned asset.(b) What is the economic service life of the new system?(c) Use the…(Chapter 13) A $20,000 machine will be purchased by a company with an MARR of 10%. It will cost $5,000 to install and removal costs are insignificant. What is its economic life and minimum EUAC cost given the following O&M costs: YR, n 1 2 3 4 5 O&M $5,000 $8,000 $11,000 $14,000 $17,000
- A consumer electronics company was formedto develop cell phones that run on or are rechargedby fuel cells. The company purchased a warehouseand converted it into a manufacturing plant for$6,000,000. It completed installation of assemblyequipment worth $1,500,000 on December 31st. Theplant began operation on January 1st. The companyhad a gross income of $8,500,000 for the calendaryear. Manufacturing costs and all operating expenses,excluding the capital expenditures, were $2,280,000.The depreciation expenses for capital expendituresamounted to $456,000.(a) Compute the taxable income of this company.(b) How much will the company pay in federalincome taxes for the year?6BE11-9 Everly Corporation acquires a coal mine at a cost of $400,000. Intangible development costs total $100,000. After extraction has occurred, Everly must restore the property (estimated fair value of the obli- gation is $80,000), after which it can be sold for $160,000. Everly estimates that 4,000 tons of coal can be extracted. If 700 tons are extracted the first year, prepare the journal entry to record depletion. BE11-10 In its 2011 annual report, Campbell Soup Company reports beginning-of-the-year total assets of $6,276 million, end-of-the-year total assets of $6,862 million, total sales of $7,719 million, and net income of $805 million. (a) Compute Campbell's asset turnover. (b) Compute Campbell's profit margin on sales. (c) Compute Campbell's return on assets using (1) asset turnover and profit margin and (2) net income.A firm is considering purchasing a machinethat costs $65,000. It will be used for six years, andthe salvage value at that time is expected to be zero.The machine will save $35,000 per year in labor, butit will incur $12,000 in operating and maintenancecosts each year. The machine will be depreciatedaccording to five-year MACRS. The firm’s tax rateis 40%, and its after-tax MARR is 15%. Should themachine be purchased?
- 11:36 00 VOLTE 76% expert.chegg.com/qna/auth Chegg Hide student question Time Left: 01:51:59 A 8 ✓ Student question A machine has a first cost of $24,000. Its market value declines by 20% annually. The repair costs are covered by the warranty in Year 1, and then they increase $900 per year. The firm's MARR is 12%. Find the minimum EUAC for this machine and its economic life. Skip G Exit Σ Q 2 Submit ... Training9. An optical scanning machine was purchased for P150,000 in the current tax year (year one) It is to be used for reproducing blueprints of engineering drawings, and its MACRS class life is nine years. The estimated market value of this machine at the end of 10 years is P30,000. What is the GDS recovery period of the machines? а. 4years b. 5 years с. 6 уears d. 7 years Based on your answer to the preceding question , what is the depreciation deduction in year four? d. P17, 280 10. a. P 15, 500b. P25, 920 c. P 16,500 11. What is the BV at the beginning of year 5? b. P25, 920 a. P 15, 500 c. P 16,500 d. P17, 280You are evaluating two different silicon wafer milling machines. The Techron | costs $264,000, has a 3-year life, and has pretax operating costs of $71,000 per year. The Techron Il costs $460,000, has a 5-year life, and has pretax operating costs of $44,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $48,000. If your tax rate is 22 percent and your discount rate is 12 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) > Answer is complete but not entirely correct. Techron I $ -134,840.83 Techron II $ -107,570.18
- Twelve years ago, an industrial facility bought a boring machine for P65,000. The estimated life of this machine is25 years and a depreciation reserve had been placed based on this. The price of the latest model is P125,000 andthe facility owner wants to replace the machine with this latest model. The old unit can be sold for P18,000. Howmuch new capital will be required for the purchase?A Veterans Administration (VA) hospital isto decide which type of boiler fuel system will mostefficiently provide the required steam energy outputfor heating, laundry, and sterilization purposes. Thecurrent boilers were installed in the early 1950s andare now obsolete. Much of the auxiliary equipmentis also old and in need of repair. Because of thesegeneral conditions, an engineering recommendationwas made to replace the entire plant with a new boilerplant building that would house modern equipment.The cost of demolishing the old boiler plant wouldbe almost a complete loss, as the salvage value of thescrap steel and used brick was estimated to be onlyabout $1,000. The VA hospital’s engineer finallyselected two alternative proposals as being worthyof more intensive analysis. The hospital’s annualenergy requirement, measured in terms of steam output, is approximately 145,000,000 pounds of steam.As a rule of thumb for analysis, 1 pound of steam isapproximately 1,000 Btu, and 1 cubic foot…1) A public agency is obliged to purchase a compressor with an economic life of 10 years or by leasing at the same time. The purchase price of the compressor is 7.500.000 TL, and if it is purchased, it will bear 250.000 TL annual electricity consumption expense, 300.000 TL standard maintenance repair expenses and an additional 600.000 TL maintenance expenses every two years. The scrap value of the compressor is 1.500.000 TL. If the compressor is not purchased and a lease is chosen, 2,500,000 rents per year, including all operating expenses, will be paid for 10 years. Since the annual nominal interest rate is 22%, evaluate the way in which the public agency should obtain the compressor according to the ANNUAL EXPENSE method.