To properly account for depreciation expense, depreciation should first be _____ due to its impact on _____ and then be _____ due to its impact on _____."
Subtracted; cash flows; added; taxes |
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Subtracted; taxes; added; cash flows |
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Added; cash flows; subtracted; taxes |
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Added; taxes; subtracted; cash flows |
To properly account for depreciation expense, depreciation should first be subtracted due to its impact on taxes and then be added due to its impact on cash flows.
Second Option (Subtracted; taxes; added; cash flows) is correct
Reasons:
In the following example, Revenue is $100 and operating expenses are $40 and depreciation is $10. Depreciation is first subtracted (check the yellow box below) due to its impact on Taxes and then it is added back (check the green box below) due to its impact on Cash flows.
To properly account for depreciation expense, depreciation should first be _____ due to its impact on...
When computing the net present value of a piece of equipment, depreciation on the equipment should be a. subtracted from income to get cash flows b. subtracted net of tax from income to get cash flows c. added to income to get cash flows d. added to net income net of tax to get cash flows
Which of the following statements about the Accumulated depreciation account is (are) correct? (Check all that apply.) Accumulated depreciation is an expense account. The Accumulated depreciation account allows the original cost of the asset to remain in the plant asset account. Accumulated depreciation is a contra account. Accumulated depreciation is added to its plant asset on the income statement. Accumulated depreciation is subtracted from its plant asset on the balance sheet. Accumulated depreciation accumulates the total depreciation taken on an asset since its purchase.Explain what unearned...
In calculating the statement of cash flows, depreciation is added to net income because Group of answer choices it represents additional income for the firm. it is a non-cash expense that was subtracted to initially lower the taxable income. it is often a large number. depreciation represents a net inflow of cash.
Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $ 187,000 and has a 5-year MACRS recovery period , has gathered the following data relative to the current year's operations: Accruals $ 15,600 Current assets 119,000 Interest expense 15,900 Sales revenue 414,000 Inventory 70,500 Total costs before depreciation, interest and taxes 285,000 Tax rate on ordinary income 21 % a. Use the relevant data to determine the operating cash flow...
If the firm’s working capital increases, then: a- it should be subtracted from the cash flows since it is a cash outflow. b- it should be subtracted from the cash flows since it is a cash inflow. c- it should be added from the cash flows since it is a cash outflow. d- it should be added from the cash flows since it is a cash inflow.
please read questions because its third time no one can help 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 A, has gathered the following 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 15,000 400,000 70,000 290,000 21% a. Use the...
Depreciation and accounting cash flow A firm in the third year of depreciating its only asset, which originally cost $173,000 and has a 5-year MACRS recovery period , has gathered the following data relative to the current year's operations: Accruals $15,300 Current assets 117,000 Interest expense 15,200 Sales revenue 413,000 Inventory 69,600 Total costs before depreciation, interest and taxes 297,000 Tax rate on ordinary income 21% a. Use the relevant data to determine the operating cash flow for the current...
Net income of Mansfield Company was $41,000. The accounting records reveal depreciation expense of $76,000 as well as increases in prepaid rent, salaries payable, and income taxes payable of $56,000, $19,000, and $16,000, respectively. Prepare the cash flows from operating activities section of Mansfield's statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Cash flows from operating activities: Adjustments for noncash effects: Changes in operating assets and liabilities: Net cash...
Question 5 4 pts Which is the correct statement? Depreciation expense has a negative impact on free cash flow Free Cash Flow = (Revenues - Costs - Depreciation) (1 - TC) - Capital Expenditures - ANWC + TC X Depreciation Free Cash Flow = (Revenues - Costs) (1 - TC) - Capital Expenditures - ANWC + TC x Depreciation Net working capital is the difference between all current liabilities and all current assets
Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 33% 20% 14% 45% 32% 25% 15% 19% 12% 12% 5% 10 years 10% 18% 14% 7% OVOUWN 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the...