Question

the biglow bottling company is contemplating the replace of use of it's bottling machine with a newer and efficient one. the old machine was purchase prior to the TCJA, has a book value of 550,000 and a remaining useful life at 5 years. the firm does not expect to realize any return from scrapping the old machine in 5 years, but it c an sell it to no other firm's in the industry for 235,000. the old machine only depreciate by 110,000 per year, using the straight-line method the new machine has a purchase price of 1,100,000, and estimated useful life of 5 years at an estimate salvage value of 140,000. the new machine is eligible for 1004 bonus depreciation at the time of purchase. its expected to economize on electric power usage, labor and repair cost, ss well as to reduce the number of defective bottles. in total an annual savings before taxes of 205,000 will realized if the new machine is installed. the company's marginal tax rate is 25% and it has a 12% a. which initial cash outlay is regarded for the new machine after bonus depreciation is considered b. calculate the change in the annual depreciation expense if the replacement is made year change in depreciation 1 2 3 4 5

          the biglow  bottling  company is contemplating the replace of use of it's bottling machine with a newer and efficient one. the old machine was purchase prior to the TCJA, has a book value of  550,000 and a remaining useful life at 5 years. the firm does not expect to realize any return from scrapping the old machine in 5 years, but it c an sell it to no other firm's in the industry for 235,000. the old machine only depreciate by 110,000 per year, using the straight-line method
the new machine has a purchase price of 1,100,000, and estimated useful life of 5 years at an estimate salvage value of 140,000. the new machine is eligible for 1004 bonus depreciation at the time of purchase. its expected to economize on electric power usage, labor and repair cost, ss well as to reduce the number of defective bottles. in total an annual  savings before taxes of 205,000 will realized if the new machine is installed. the company's marginal tax rate is 25% and it has a 12% 
a. which initial cash outlay is regarded for the new machine after bonus depreciation is considered
b. calculate the change in the annual depreciation expense if the  replacement is made
year change in depreciation
1
2
3
4
5

Added by Janet S.

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