Show all work. Enter the answers for each problem legibly on the Cover Sheet. Submit before due date/time on Blackboard in a single pdf file.

NAME: ___________________________________________________________ IE 305 Spring 201 6 Homework Chap 9 Answer Sheet You must attach your work to the back of this Cover Sheet. Show all work . Enter the answers for each problem legibly on the Cover Sheet. Submit before due date/time on Blackboard in a single pdf file. 1) A combine used for harvesting corn was purchased new 6 years ago for $400,000 with the intention of using it for its full asset life of 2 0 years (when its salvage value would be zero). It has a book value of $125,543 and can be sold for $130,000 now . What is the economic depreciation of the combine at this point in time? ________________ 2) You pay $500,000 for a house and the land that it is on. The land is valued at $195,000 and the house is valued at $305,000. You decide to demolish the house ($20,000 demolition cost) and build a go -cart track at a cost of $ 650,000. What is the cost basis of the go -cart track for depreciation purposes? __________ ________ 3) Using the SL method, compute the annual allowable depreciation for a machine that costs $30,000 to purchase and $ 2,000 to install with a n 8-year life and a $ 4,000 salvage value. Answer _____________________ _______________________________________________ 4) Compute the depreciation each year of a machine that costs $ 50 ,000 to purchase, and $ 2,000 to install with an 8 -year life. Use the DDB method (multiplier = 2) switching to straight line depreciation when appropriate. Assume a salvage value of $0. D1 =_____ D2 =_____ D3 =_____ D4 =_____ D5 =_____ D6 =_____ D7 =_____ D8 =_____ 5) Compute the depreciation each year of a machine that costs $ 50 ,000 to purchase, and $ 2,000 to install with an 8 -year life. Use the DDB method (multiplier = 2) switching to straight line depreciation when appropriate. Assume a salvage value of $ 2,00 0. D1 =_____ D2 =_____ D3 =_____ D4 =_____ D5 =_____ D6 =_____ D7 =_____ D8 =_____ 6) You purchase a 3D printer for $7 5,000 that you expect to print 8 ,000 parts over its lifetime. You print 1,500 parts your first year. Assume no salvage value for the printer. What is your allowable depreciation for the first year using the Units of Production Method? ____ _________________________________________________________________ ______________________________________________________________________________ 7) Your com pany generated $ 4.0 million in revenue for 2012 and incurred $3.35 million in expenses. a. How much Federal tax due you owe? _________________ _______________ b. What is your average tax rate? ______________ ________________________ c. What is your marginal tax rate? _____________ ________________________ 8) You purchase d a commercial building and lot for $ 240,000 on May 4th, 2014. The lot itself was valued at $85,000 when purchased . You s old the lot and building for $400,000 on Feb 15th of 201 5. Use MACRS depreciation and note that t his property is considered non -residential real property. What are your allowable tax depreciation amounts for those two years? 2014_________ _________________________________ 2015_________ _________________________________ 9) Your company generated $ 400,000 in taxable income for 201 5. Assum e that your average Federal tax rate is 25% and your State tax rate is 8% . a. What is your combined tax rate? ___________ ______________________ b. How much Fed eral tax do you owe? ___________ ___________________ c. How much State tax do you owe? __________ _______________________