Gary Gilmour Began Business on 1 January 20X1,with a 31

question 3

Essay

Gary Gilmour began business on 1 January 20X1,with a 31 December balance date.All figures are GST-exclusive.
On that day he purchased a new factory machine for making canned soup for $42,000 from McWaters Ltd.
Freight of $900 and installation expenses of $1,100 were paid to get the machine into Gary's factory and ready for use.
Gary had to employ a repairman to get the machine operating correctly,as it was found to have been dropped accidentally by one of his employees on delivery,and needed a few things fixing and replaced as a result.The repairs and parts replaced cost $1,000.
The machinery has an estimated life of 20,000 hours.
The hours the machinery is estimated to be used annually are:
Year 1 2,000 hours
Year 2 2,500 hours
Year 3 3,000 hours
Year 4 4,500 hours
Year 5 4,000 hours
Gary also had a Nissan Maxima turbo vehicle,which he decided to register as a business vehicle,at a cost of $40,000 on 1 January 20X1.
a Show the appearance of the Fixed assets section of the Balance Sheet as at 31 December 20X5,assuming:
• actual usage equals estimated usage for the machine
• the units of use method is used
• the vehicle is depreciated at 20% diminishing value.
Round all amounts to the nearest whole dollar.Include any relevant subtotals.
b Show the appearance of the relevant section of the Income Statement for 31 December 20X5,assuming that:
• actual usage equals estimated usage
• Gary uses only one 'Operating expenses' section for all depreciation amounts
• other operating expenses are: Power $12,000,Materials $4,000,and Factory wages $45,000,which remain constant each year.
Include any relevant subtotals.
c Suppose Gary had the option of choosing the diminishing value method for the machinery depreciation at a rate of 20%,or straight line depreciation with an estimated residual value of $5,000 and a useful life of 10 years.Recalculate annual depreciation for years 20X1-20X5,and the accumulated depreciation as at the end of year 31/12/20X5.
d Assuming that any of the 3 depreciation methods (units of use,diminishing value,and straight line)as above are acceptable for tax purposes,state 1 advantage of using each of the 3 methods.

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Understand the principles of shaping and its application in modifying behavior.

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Definitions:

FOB Origin Pricing

A pricing term indicating that the buyer assumes shipping costs from the seller's location, and owns the goods in transit.

Reciprocating Compressor

A type of compressor that uses pistons driven by a crankshaft to deliver gases at high pressure.

Geographic Pricing

A pricing strategy where the price of a product or service varies according to the geographic location of the buyer.

Single-Zone Pricing

A pricing strategy where a company charges the same price for its product or service, regardless of the geographical location of the customer.