1. Duval Industries purchases $110,000 of machinery on January 1, 2020. The machinery is expected to have...
Question:
1. Duval Industries purchases $110,000 of machinery on January 1, 2020. The machinery is expected to have a 5 year useful life and a residual value of $10,000. On January 1, 2023, management determines that the equipment will last for an additional 2 years and the new residual value is $6,000. Duval uses straight-line depreciation and has a calendar year end. Instructions Calculate the 2023 depreciation expense related to this piece of machinery (place answer in space below without $ sign)
2. Mergeron Industries purchases a new delivery van. The van costs $32,000 and is expected to last 5 years. The company uses straight-line depreciation for accounting purposes. The residual value is expected to be $2,000. The summary rate is 30%.
Calculate the deferred tax liability for year one ignoring the half year rule.
3. Rousseau Corporation has the following Statement of Income for the year ended May 31, 2020:
Sales........................................................... $1,675,200
Cost of goods sold...................................... . 887,600
Gross margin.............................................. ..... 787,600
Selling & administrative expense............... ..... 241,200
Interest expense......................................... .. 65,000
Income before income taxes..................... ..... 481,400
Income taxes.............................................. .. 192,500
Net income................................................. .. $ 288,900
Calculate the interest-coverage ratio for Rousseau Corporation for May31, 2020
Contemporary financial management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow