Reference no: EM132580482

Problem 1: CVN corp purchases a new machine. The machine costs $10,000. They incur another $1,000 to bolt the machine into the floor and connect it to their electrical system. The machine will last for 8 years, but CVN plans to use it for 4 years and then upgrade to a more efficient item (energy standards continue to get better for these machines). At the end of the 4 years, CVN believes they will be able to sell the item for $3,000. CNN uses straight-line deprecation for all items. How much depreciation should they recognize in the first year?

(Note - for all questions asking for numerical answers, write the number only, no dollar sign ($))

Problem 2: CVN corp also has an automated shelf storage system. They paid $100,000 for the system completely installed. It will be used for 20 years and then scrapped. CVN does not anticipate receiving payment for it at the time of scrapping, but the raw materials are worth enough that the installer will remove it for free. What amount would show up on the face of CVN's balance sheet at the end of the 4th year of use?

Problem 3: CVN purchased a truck three years ago. They paid $20,000 and expected to use the truck for five years, then sell it for $5,000. At the beginning of year three, they decide the truck is still running well, so they will use it for 8 years and sell it for $2,000. How much will the truck depreciate in year three?

Problem 4: CVN corp. has a car they have used for two years for their supervisor to drive. They paid $32,000 for the car with the plan of driving it for 8 years and then donating it to charity (that is, scrapping it with no expected salvage value). However, at the beginning of the third year the supervisor has told them she hates the car and it makes her back hurt. They have asked her to drive it for one more year, they they will sell it. They expect to be able to sell it for $15,000. How much depreciation will they recognize for year 3?