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Chemical Engineering
7-14 A chemical company has a total income of $1 million per year and total expenses of $600,000 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of $850,000 with a MACRS recovery period of 5 years, and a straight-line recovery period of 9.5 years. Thirty-five percent of all profits before taxes must be paid out for income taxes. What would be the reduction in income tax charges for the first year of operation if the MACRS method were used for the depreciation accounting instead of the straight-line method?

7-14 A chemical company has a total income of $1 million per year and total expenses of $600,000 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of $850,000 with a MACRS recovery period of 5 years, and a straight-line recovery period of 9.5 years. Thirty-five percent of all profits before taxes must be paid out for income taxes. What would be the reduction in income tax charges for the first year of operation if the MACRS method were used for the depreciation accounting instead of the straight-line method?

Introduction to Chemical Engineering Thermodynamics
Introduction to Chemical Engineering Thermodynamics
8th Edition
ISBN:9781259696527
Author:J.M. Smith Termodinamica en ingenieria quimica, Hendrick C Van Ness, Michael Abbott, Mark Swihart
Publisher:J.M. Smith Termodinamica en ingenieria quimica, Hendrick C Van Ness, Michael Abbott, Mark Swihart
Chapter1: Introduction
Section: Chapter Questions
Problem 1.1P
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7-14 A chemical company has a total income of $1 million per year and total expenses of $600,000 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of $850,000 with a MACRS recovery period of 5 years, and a straight-line recovery period of 9.5 years. Thirty-five percent of all profits before taxes must be paid out for income taxes. What would be the reduction in income tax charges for the first year of operation if the MACRS method were used for the depreciation accounting instead of the straight-line method? |
Transcribed Image Text:7-14 A chemical company has a total income of $1 million per year and total expenses of $600,000 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of $850,000 with a MACRS recovery period of 5 years, and a straight-line recovery period of 9.5 years. Thirty-five percent of all profits before taxes must be paid out for income taxes. What would be the reduction in income tax charges for the first year of operation if the MACRS method were used for the depreciation accounting instead of the straight-line method? |
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