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ABC Mining earned $1,000,000 on sales of uranium ore. The company sold 10 million tons out of approximately 50 million tons in the ground, with an unrecovered basis of $2,500,000. (Enter all responses below as absolute values)
What is ABC's cost depletion?
What is ABC's percentage depletion given a statutory percentage depletion rate of 22 percent (ignore taxable income limitation)?
What is ABC's depletion deduction?
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- South African Gold Mines, Inc. is writing off its $210 million investment using the cost depletion method. An estimated 700,000 ounces of gold areavailable in its developed mines. This year 35,000 ounces were produced and sold at an average price of $1400 per ounce. Taxable income for the year is estimated at $4.8 million. The cost depletion for the year is closest to:a. $7.35 million, which is 15% of the gross income of $49.0 million.b. $2.4 million, which is 50% of estimated taxable income.c. $10.5 million.d. $42 million.14) Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $11.2 million, of which 75% has been depreciated. The used equipment can be sold today for $3.2 million, and its tax rate is 25%. What is the equipment's after-tax net salvage value? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar. ________$Walker Inc. is considering the purchase of new equipmentthat will automate production and thus reduce labor costs. Walker made the following estimatesrelated to the new machinery: Cost of the equipment $120,000Reduced annual labor costs $40,000Estimated life of equipment 5 yearsTerminal disposal value $0After-tax cost of capital 8%Tax rate 25%Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur atyear-end except for initial investment amounts. Q. Calculate discounted payback period?
- At the beginning of Year 1, Ithaca Incorporated purchased land for $1,500,000 from which it expects to extract 800,000 tons of minerals. The estimated residual value is $250,000. What is Ithaca's unit depletion rate? Round your answer to two decimal places.Walker Inc. is considering the purchase of new equipmentthat will automate production and thus reduce labor costs. Walker made the following estimatesrelated to the new machinery: Cost of the equipment $120,000Reduced annual labor costs $40,000Estimated life of equipment 5 yearsTerminal disposal value $0After-tax cost of capital 8%Tax rate 25%Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur atyear-end except for initial investment amounts. Q. Calculate net present value?Walker Inc. is considering the purchase of new equipmentthat will automate production and thus reduce labor costs. Walker made the following estimatesrelated to the new machinery: Cost of the equipment $120,000Reduced annual labor costs $40,000Estimated life of equipment 5 yearsTerminal disposal value $0After-tax cost of capital 8%Tax rate 25%Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur atyear-end except for initial investment amounts. Q. Calculate payback period?
- Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $13.8 million, of which 70% has been depreciated. The used equipment can be sold today for $4.6 million, and its tax rate is 25%. What is the equipment's after-tax net salvage value? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000.Kennon Corporation is planning to replace an old machine. The annual cost of operating the old machinery is P138,600 excluding depreciation, while the estimate for the new machinery is P91,300. The cost of the new machinery is P160,000, net of the trade-in allowance, with an estimated useful life of 8 years, no salvage value. The effective income tax rate is 40% and the cost of capital is 8%. The old machinery has an annual depreciation of P15,000 while the new machinery is estimated to have an annual depreciation of P20,000. The book value of the old machine is zero. Compute for the internal rate of return of the investment. Use 3 decimal places for PV factors.Houston Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Houston made the following estimates related to the new machinery: Cost of the equipment $146,000 Reduced annual labor costs $45,000 Estimated life of equipment 10 years Terminal disposal value $0 After-tax cost of capital 8% Tax rate 28% Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur at year-end except for initial investment amounts. Calculate (a) net present value, (b) payback period, (c) discounted paybackperiod, and (d) internal rate of return. 1. Compare and contrast the capital budgeting methods in requirement 1. 2.
- A Corporation is planning to add a new product line to its present business. The new product will require a new equipment costing PL.200,000 with a five-year life with no salvage value. The following estimates are made available: Annual Sales P6,600,000: Materials P2,200,000; Labor P900,000; FOH (excluding depreciation) P500,000; Selling and Administrative Expenses PL,500,000; and Income tax of 40%. Requirement: Compute the net cash inflows using liquidity and yield preference theories.Tony Industries plan to sell a machine in the current tax year. The cost basis presented is RM500,000 and the accumulated depreciation is RM450,000. The effective income tax rate is 0.30. Determine: the minimum sold price required of the machine to gain on the disposal and (i) (ii) the revised minimum sold price required of the machine to gain on the disposal if the effective income tax rate adjusted to 0.50 while accumulated depreciation increased 10 %.An asset that was originally purchased for $60,818 is being depreciated straight-line over its useful life. 83% of the asset has been depreciated. The asset can be sold for $35,191. If the company's tax rate is 34%, what is the after-tax salvage of this asset? Express your answer to the nearest whole number.