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Elementary,Middle School,High School,College,University,PHD
| Teaching Since: | May 2017 |
| Last Sign in: | 399 Weeks Ago |
| Questions Answered: | 66690 |
| Tutorials Posted: | 66688 |
MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Chevron Phillips Chemical Company in Baytown, Texas, acquired new equipment for its polyethylene processing line. This chemical is a resin used in plastic pipe, retail bags, blow molding, and injection molding. The equipment has an unadjusted basis of B = $400,000, a life of only 3 years, and a salvage value of 5% of B. The chief engineer asked the finance director to provide an analysis of the difference between (1) the DDB method, which is the internal book depreciation and book value method used at the plant, and (2) the required MACRS tax depreciation and its book value. He is especially curious about the differences after 2 years of service for this short-lived, but expensive asset. Use hand and spreadsheet solutions to do the following:
(a) Determine which method offers the larger total depreciation after 2 years.
(b) Determine the book value for each method after 2 years and at the end of the recovery period.
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