4.4 - Taxes
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Practice Questions
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What is the difference between ownership costs and operating costs?
💡 Hint: Think about costs that occur whether you are using equipment or not.
What expenses might be considered as initial costs?
💡 Hint: Consider everything required to make the equipment ready for use.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is included in ownership costs?
💡 Hint: Think about the ongoing costs incurred without active use of the equipment.
True or False: Operating costs are incurred only when the equipment is used.
💡 Hint: Recall what is considered a cost due to usage.
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Challenge Problems
Push your limits with advanced challenges
An equipment costs $150,000, has a salvage value of $15,000, and a useful life of 5 years. Calculate annual depreciation using the straight-line method and explain how this amounts contribute to ownership costs.
💡 Hint: Break down the formula and plug in the values carefully.
If a contractor purchases a piece of equipment at $120,000, later expects it to sell for $20,000 and estimates a useful life of 8 years, what would be the annual depreciation using the double declining balance method for the first year?
💡 Hint: Remember to consider that the double declining method applies to the entire initial cost, not the salvage value.
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