Case Objectives: This case demonstrates the importance of the deprecation schedule and the book value of...
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Case Objectives: This case demonstrates the importance of the deprecation schedule and the book value of an asset. The depreciation schedule and book value will determine the tax rate and insurance premium adjustment. Descriptions: Halcrow Yolles purchased equipment for new highway construction in Manitoba, Canada, costing $500,000 Canadian. The estimated salvage at the end of the expected life of 7 years is $50,000. Various acceptable depreciation methods are being studied currently. Questions to consider a) What is the depreciation in financial analysis and how the business use it for financial benefits? b) Illustrate a few methods of depreciation practices in the Middle East. c) How the corporate and small business use depreciation in KSA? d) Based on the Description above: Prepare a book value schedule with deprecation for the equipment using a "straight line" depreciation method. e) Based on the Description above: Prepare a book value schedule with deprecation for the equipment using the "Sum of the year digit" depreciation method. f) Based on the Description above: Prepare a Book depreciation schedule with deprecation charges for the 3 years as $50,000, $34,000, and $24,000, respectively. Determine the book value after 3 years, based on the given depreciation schedule. g) Based on the Description above: If the sifter's market value today is $20,000, determine the difference between current book value, market value, and the expected salvage. Compare the book value as found in (a) and (b). Plot the book value in all cases. h) Based on the Description above: Determine the yearly depreciation rate and the total percentage of installed cost written off over the year. i) Why deprecation is used in business and what is the purpose? j) Review four (4) Journal articles in the deprecation Case Objectives: This case demonstrates the importance of the deprecation schedule and the book value of an asset. The depreciation schedule and book value will determine the tax rate and insurance premium adjustment. Descriptions: Halcrow Yolles purchased equipment for new highway construction in Manitoba, Canada, costing $500,000 Canadian. The estimated salvage at the end of the expected life of 7 years is $50,000. Various acceptable depreciation methods are being studied currently. Questions to consider a) What is the depreciation in financial analysis and how the business use it for financial benefits? b) Illustrate a few methods of depreciation practices in the Middle East. c) How the corporate and small business use depreciation in KSA? d) Based on the Description above: Prepare a book value schedule with deprecation for the equipment using a "straight line" depreciation method. e) Based on the Description above: Prepare a book value schedule with deprecation for the equipment using the "Sum of the year digit" depreciation method. f) Based on the Description above: Prepare a Book depreciation schedule with deprecation charges for the 3 years as $50,000, $34,000, and $24,000, respectively. Determine the book value after 3 years, based on the given depreciation schedule. g) Based on the Description above: If the sifter's market value today is $20,000, determine the difference between current book value, market value, and the expected salvage. Compare the book value as found in (a) and (b). Plot the book value in all cases. h) Based on the Description above: Determine the yearly depreciation rate and the total percentage of installed cost written off over the year. i) Why deprecation is used in business and what is the purpose? j) Review four (4) Journal articles in the deprecation
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