Homework Answers
Solution
a.True.Taxable Income = Gross Income - Operating Expenses - (financial expenses that include interet expense,depreciation expenses and other financial expenses)
b.False. In MACRS depreciation,there is no salvage value i.e., the asset is depreciated completely to zero.
c.Yes moslty the before-tax rate of return is greater than the after taxrate of return because most of the time tax is paid.
But in case if there is tax credit taking place in a particular period to the company due to reasons like subsidies from the government (or) tax refund then the after tax rate of return will be more than pre-tax rate of return.
d.Yes because maximizing the depreciation in the initial years means higher higher depreciation expenses,so lower net profits which means less amount to be paid in taxes.Time value of money concept...
e.Yes.It does not take into consideration the project's return on investment.ignores the time value of money and the also the cash flows taking place after the pay back period.
f. Straight line depreciation a constant depreciaiton charge is used.
Depreciaition per year= (Purchase Value - Salvage Value) / (No.of useful years)
g.For MACRS property,automobiles and trucks are considered 5-year property.
h.After Tax cash Flow =Before Tax cash flow - Income Tax Liability
i.14% is the allowable depletion for mollusk shells
j.Units of production Depreciation requires a prodcution (or) utilization schedule.
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1. Answer True or False for the following: a. Taxable Income Gross Income - Expenses -...
1. Answer True or False for the following: a. Capital expenditures are considered taxable income b....
1. Answer True or False for the following: a. Capital expenditures are considered taxable income b. For MACRS depreciation, salvage value varies C. Payback period analysis may select the wrong alternative. d. Taxable Income = Gross Income - Expenses - Depreciation charges In most cases we want to maximize the depreciation charges taken in the first and second years. For straight line depreciation, a constant depreciation charge is made f. Fill in the Blanks for the following questions: A company...
please do #2 and #6 Te=15% Use this scenario for problems 2-6 Oxford Manufacturing company needs to invest in a new a...
please do #2 and #6 Te=15%
Use this scenario for problems 2-6 Oxford Manufacturing company needs to invest in a new air compressor. They have narrowed the choice to two alternatives, A and B. the following financial data has been collected: Model A Model B Investment Cost $25,000 $35.000 Annual Incremental Revenues $18,700 $16,500 Annual O&M Costs $5,600 $3.500 Salvage Value $4,000 Service Life 10 years 10 years Depreciation S-vear 5-year Method MACRS MACRS Assume the After Tax is MARR-10%...
EESEEEEEEEEEEEEEEEEE 1) TRUE/False a) The income tax rates are the same for capital gains and depreciation...
EESEEEEEEEEEEEEEEEEE 1) TRUE/False a) The income tax rates are the same for capital gains and depreciation recapture of an asset T/F b) Depletion can be calculated in two different approach: Depletion allowance or percentage depletion / c) In Straight Line depreciation, the book value is zero at the end of its life. T/F d) Depreciation is method of capital expensed over period of time T/F ce) Income tax rates are same for capital gains and depreciation recapture of an asset....
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...
2) A project utilizing CNCs provides a revenue (income) of $20,000 increasing at $5,000 per year...
2) A project utilizing CNCs provides a revenue (income) of $20,000 increasing at $5,000 per year during a four (4)-year investment period. The machine to be used on the project is purchased for $20,000 and has an expected life of 4 years. he salvage value at the end of 4 years is $4,000. Out-of-pocket expenses are $10,000 for the first year and increases arithmetically at $1,000/yr thereafter, and depreciation deduction for income tax purposes are taken using a Years Digit...
17-5 conformity between its taxable income and income before taxes. BE17-1. Income Taxes Payable. Immox Company...
17-5
conformity between its taxable income and income before taxes. BE17-1. Income Taxes Payable. Immox Company has conformity between its taxab In Immox's taxes payable are $140,000 and its tax rate is 40%, what is its net income BE17-2. Income Taxes Payable. Limmox Company has conformity between its tas taxes. Limmox Company's net income after taxes is $195,000 ang rmity between its taxable income and income before et income after taxes is $195,000 and its tax rate is 35%. What...
please read questions because this is third time no body can answer i attached one of...
please read questions because this is third time no body can
answer i attached one of wrong answers
, has gathered the following Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $180,000 and has a 5-year MACRS recovery period data relative to the current year's operations: Accruals Current assets Interest expense Sales revenue Inventory Total costs before depreciation, interest and taxes Tax rate on ordinary income $15,000 120,000 15,000...
CFAT is Cash Flow After Tax SL- Straight line T.I- Taxable Income Problem 2-20 points Company...
CFAT is Cash Flow After Tax
SL- Straight line
T.I- Taxable Income
Problem 2-20 points Company B wants to compare the investment in three different countries based on the following information. Tax rate is 30% for all three countries. MARR is 9% compounded quarterly. Depreciation method Depreciation recapture Purchase Cost Gross Income Expense Salvage Life in years Actual selling price Country 1 SL with n=5 Not taxed 100,000 26,000 1,000 0 5 20,000 in year 5 Country 2 MACRS with...
[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...
kindly help with question 12-24 step by step by hand. thanks 444 CHAPTER 12: INCOME TAXES...
kindly help with question 12-24 step by step by hand.
thanks
444 CHAPTER 12: INCOME TAXES FOR CORPORATIONS Contribute net present worth of this investment.com Mukasa Ssemakula, Wayne State Univ 12-25 A firm has invested $400,000 in ment. They will depreciate the eau bonus depreciation with the balan MACRS, assuming a $50,000 salvac end of the 5-year useful life. The fir to have a before-tax cash flow, afte expenses of operation (except depreci $165,000 per year. The firm's combined tax...
1. Answer True or False for the following: a. Capital expenditures are considered taxable income b. For MACRS depreciation, salvage value varies C. Payback period analysis may select the wrong alternative. d. Taxable Income = Gross Income - Expenses - Depreciation charges In most cases we want to maximize the depreciation charges taken in the first and second years. For straight line depreciation, a constant depreciation charge is made f. Fill in the Blanks for the following questions: A company...
please do #2 and #6 Te=15%
Use this scenario for problems 2-6 Oxford Manufacturing company needs to invest in a new air compressor. They have narrowed the choice to two alternatives, A and B. the following financial data has been collected: Model A Model B Investment Cost $25,000 $35.000 Annual Incremental Revenues $18,700 $16,500 Annual O&M Costs $5,600 $3.500 Salvage Value $4,000 Service Life 10 years 10 years Depreciation S-vear 5-year Method MACRS MACRS Assume the After Tax is MARR-10%...
EESEEEEEEEEEEEEEEEEE 1) TRUE/False a) The income tax rates are the same for capital gains and depreciation recapture of an asset T/F b) Depletion can be calculated in two different approach: Depletion allowance or percentage depletion / c) In Straight Line depreciation, the book value is zero at the end of its life. T/F d) Depreciation is method of capital expensed over period of time T/F ce) Income tax rates are same for capital gains and depreciation recapture of an asset....
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...
2) A project utilizing CNCs provides a revenue (income) of $20,000 increasing at $5,000 per year during a four (4)-year investment period. The machine to be used on the project is purchased for $20,000 and has an expected life of 4 years. he salvage value at the end of 4 years is $4,000. Out-of-pocket expenses are $10,000 for the first year and increases arithmetically at $1,000/yr thereafter, and depreciation deduction for income tax purposes are taken using a Years Digit...
17-5
conformity between its taxable income and income before taxes. BE17-1. Income Taxes Payable. Immox Company has conformity between its taxab In Immox's taxes payable are $140,000 and its tax rate is 40%, what is its net income BE17-2. Income Taxes Payable. Limmox Company has conformity between its tas taxes. Limmox Company's net income after taxes is $195,000 ang rmity between its taxable income and income before et income after taxes is $195,000 and its tax rate is 35%. What...
please read questions because this is third time no body can
answer i attached one of wrong answers
, has gathered the following Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $180,000 and has a 5-year MACRS recovery period data relative to the current year's operations: Accruals Current assets Interest expense Sales revenue Inventory Total costs before depreciation, interest and taxes Tax rate on ordinary income $15,000 120,000 15,000...
CFAT is Cash Flow After Tax
SL- Straight line
T.I- Taxable Income
Problem 2-20 points Company B wants to compare the investment in three different countries based on the following information. Tax rate is 30% for all three countries. MARR is 9% compounded quarterly. Depreciation method Depreciation recapture Purchase Cost Gross Income Expense Salvage Life in years Actual selling price Country 1 SL with n=5 Not taxed 100,000 26,000 1,000 0 5 20,000 in year 5 Country 2 MACRS with...
[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...
kindly help with question 12-24 step by step by hand.
thanks
444 CHAPTER 12: INCOME TAXES FOR CORPORATIONS Contribute net present worth of this investment.com Mukasa Ssemakula, Wayne State Univ 12-25 A firm has invested $400,000 in ment. They will depreciate the eau bonus depreciation with the balan MACRS, assuming a $50,000 salvac end of the 5-year useful life. The fir to have a before-tax cash flow, afte expenses of operation (except depreci $165,000 per year. The firm's combined tax...
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