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3. Use the information in Table 1.2 to determine the items listed below for the Accelerated...
does anyone know how to answer these questions? 1. (30% Marks) Use the information in the...
does anyone know how to answer these questions?
1. (30% Marks) Use the information in the table to determine the items listed below for the Accelerated Depreciation Method and for the Straight-line Depreciation Method. The company has 10,000 shares of stock. Item Amount($) Amount (%) Revenue 1,000,000 Costs 800,000 Tax Rate (96) 20 Depreciable Investment 500,000 Depreciation Straight Line 50,000 10 Depreciation-Accelerated (MACRS) 100,000 20 TD 1.1 Use the Accelerated Depreciation method and determine: (a) Gross Profits (b) Net Profits...
Required information [The following information applies to the questions displayed below. Manning Corporation is considering a new project requiring a $110,000 investment in test equipment with no sa...
Required information [The following information applies to the questions displayed below. Manning Corporation is considering a new project requiring a $110,000 investment in test equipment with no salvage value. The project would produce $66,500 of pretax income before depreciation at the end of each of the next six years. The company's income tax rate is 38%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the...
1.) Discuss the difference between the straight-line method of depreciation and the accelerated methods. Why do...
1.) Discuss the difference between the straight-line method of depreciation and the accelerated methods. Why do companies use different depreciation methods for tax reporting and financial reporting? 2.) What is the purpose of listing the account “Commitments and contingencies” on the balance sheet even through no dollar amounts appear? 3.) How is it possible for a company with positive retained earnings to be unable to pay a cash dividend? 4.) The King Corporation has total annual revenue of $800,000; expenses...
[The following information applies to the questions displayed below.] Manning Corporation is considering a new project...
[The following information applies to the questions displayed below.] Manning Corporation is considering a new project requiring a $90,000 investment in test equipment with no salvage value. The project would produce $73,500 of pretax income before depreciation at the end of each of the next six years. The company's income tax rate is 32%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table. (FV...
Required: 1. Complete the following table assuming use of straight-line depreciation. Net cash flow equals the...
Required: 1. Complete the following table assuming use of straight-line depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes. Income Before Depreciation Straight-Line Depreciation Taxable Income Income Taxes Net Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 2. Complete the following table assuming use of MACRS depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes. Income Before Depreciation MACRS Depreciation Taxable Income...
Project Management 1. The company treasurer must determine the best depreciation method for office furniture that...
Project Management
1. The company treasurer must determine the best depreciation method for office furniture that costs $50,000 and has a zero salvage value at the end of a 10 year depreciable life. Compute the depreciation schedule using: (a) Straight line (b) Double declining balance (C) Sum-of-years' -digits (d) Modified Accelerated Cost Recovery System (MACRS)
6. Depreciation methods Firms can use various methods to calculate depreciation, and it is important for...
6. Depreciation methods Firms can use various methods to calculate depreciation, and it is important for you to consider these different methods when evaluating firms. The impact of different depreciation methods is stronger for asset-intensive firms. Major factors that affect the depreciation of a fixed asset include the purchase cost, residual/salvage value, and estimated useful life of the asset. The purchase cost includes the asset's explicit cost plus necessary costs associated with setting up and operating the asset (such as...
Which of the following statements is CORRECT? a. Under current laws and regulations, corporations must use...
Which of the following statements is CORRECT? a. Under current laws and regulations, corporations must use straight-line depreciation for all assets whose lives are 5 years or longer. b. Using accelerated depreciation rather than straight line would normally have no effect on a project's total projected cash flows but it would affect the timing of the cash flows and thus the NPV. c. Since depreciation is not a cash expense, it has no effect on cash flows and thus no...
Exercise 12-29 Value of Accelerated Depreciation: Sum-of-Years'-Digits (SYD) and Double Declining. Balance (DDB) Methods (LO 12-3)...
Exercise 12-29 Value of Accelerated Depreciation: Sum-of-Years'-Digits (SYD) and Double Declining. Balance (DDB) Methods (LO 12-3) Freedom Corporation acquired a fixed asset for $100,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 8% and an income tax rate of 40%. (Use Exhibit 124. Appendix C. TABLE 1 and Appendix C. TABLE 2) Required: 1. What is the incremental present value of the tax benefits resulting from calculating depreciation...
Depreciation Methods Wendy's boss wants to use straight-line depreciation for the new expansion project because he...
Depreciation Methods Wendy's boss wants to use straight-line depreciation for the new expansion project because he said it will give higher net income in earlier years and give him a larger bonus. The project will last 4 years and requires $1,650,000 of equipment. The company could use either straight-line or the 3-year MACRS accelerated method. Under straight-line depreciation, the cost of the equipment would be depreciated evenly over its 4-year life. (Ignore the half-year convention for the straight-line method.) The...
does anyone know how to answer these questions?
1. (30% Marks) Use the information in the table to determine the items listed below for the Accelerated Depreciation Method and for the Straight-line Depreciation Method. The company has 10,000 shares of stock. Item Amount($) Amount (%) Revenue 1,000,000 Costs 800,000 Tax Rate (96) 20 Depreciable Investment 500,000 Depreciation Straight Line 50,000 10 Depreciation-Accelerated (MACRS) 100,000 20 TD 1.1 Use the Accelerated Depreciation method and determine: (a) Gross Profits (b) Net Profits...
Required information [The following information applies to the questions displayed below. Manning Corporation is considering a new project requiring a $110,000 investment in test equipment with no salvage value. The project would produce $66,500 of pretax income before depreciation at the end of each of the next six years. The company's income tax rate is 38%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the...
[The following information applies to the questions displayed below.] Manning Corporation is considering a new project requiring a $90,000 investment in test equipment with no salvage value. The project would produce $73,500 of pretax income before depreciation at the end of each of the next six years. The company's income tax rate is 32%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table. (FV...
Required: 1. Complete the following table assuming use of straight-line depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes. Income Before Depreciation Straight-Line Depreciation Taxable Income Income Taxes Net Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 2. Complete the following table assuming use of MACRS depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes. Income Before Depreciation MACRS Depreciation Taxable Income...
Project Management
1. The company treasurer must determine the best depreciation method for office furniture that costs $50,000 and has a zero salvage value at the end of a 10 year depreciable life. Compute the depreciation schedule using: (a) Straight line (b) Double declining balance (C) Sum-of-years' -digits (d) Modified Accelerated Cost Recovery System (MACRS)
6. Depreciation methods Firms can use various methods to calculate depreciation, and it is important for you to consider these different methods when evaluating firms. The impact of different depreciation methods is stronger for asset-intensive firms. Major factors that affect the depreciation of a fixed asset include the purchase cost, residual/salvage value, and estimated useful life of the asset. The purchase cost includes the asset's explicit cost plus necessary costs associated with setting up and operating the asset (such as...
Exercise 12-29 Value of Accelerated Depreciation: Sum-of-Years'-Digits (SYD) and Double Declining. Balance (DDB) Methods (LO 12-3) Freedom Corporation acquired a fixed asset for $100,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 8% and an income tax rate of 40%. (Use Exhibit 124. Appendix C. TABLE 1 and Appendix C. TABLE 2) Required: 1. What is the incremental present value of the tax benefits resulting from calculating depreciation...
Depreciation Methods Wendy's boss wants to use straight-line depreciation for the new expansion project because he said it will give higher net income in earlier years and give him a larger bonus. The project will last 4 years and requires $1,650,000 of equipment. The company could use either straight-line or the 3-year MACRS accelerated method. Under straight-line depreciation, the cost of the equipment would be depreciated evenly over its 4-year life. (Ignore the half-year convention for the straight-line method.) The...
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