Reference no: EM132711248

Questions -

Q1) A project requires the purchase of new equipment at a cost of $18,000, which will be depreciated over the life of the asset. A further $5000 spent on transport and installation will be added to the purchase price of the equipment for depreciation purposes, and $1000 will be spent on advertising and other operating expenditure to get the project up and running. What is the value of the asset for depreciation purposes?

a. $24,000

b. $19,000

c. $23,000

d. $18,000

Q2) A project will increase revenue from $1.9 million to $2.6 million. Wages are 50% of revenue. Maintenance on the machine will be $25,000 less than it is on the machine that will be replaced. What is the incremental revenue that will result from accepting this project?

a. $0.325 million

b. $0.375 million

c. $0.700 million

d. $0.350 million

Q3) A machine with a purchase price of $11,000 is to be depreciated over its useful working life of 6 years to a book value of zero, using straight-line depreciation. What is the book value of the machine after 3 years?

a. $5400

b. $11000

c. $5500

d. $10900

Q4) A machine with a purchase price of $6,000 is to be depreciated over its useful working life of 10 years to a book value of zero, using diminishing value depreciation. What is the amount of depreciation in Year 1?

a. $1200

b. $1100

c. $600

d. $300