A chemical company has a total income of 1.94 million per year and total expenses of 567347 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of 1.39with a MACRS recovery period of 4 years, and a straight-line recovery period of 12.4 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

A chemical company has a total income of 1.94 million per year and total expenses of 567347 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of 1.39with a MACRS recovery period of 4 years, and a straight-line recovery period of 12.4 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A chemical company has a total income of 1.62 million per year and total expenses of 716057 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of 1.24 with a MACRS recovery period of 7 years, and a straight-line recovery period of 9.4 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?-
The 2021 Income statement for Egyptian Nolse Blasters shows that depreciation expense is $80 million, NOPAT is $239 million. At the end of the year, the balance of gross fixed assets was $650 million. The change in net operating working capital during the year was $70 million. Egyptian's free cash flow for the year was $180 million. Calculate the beginning-of-year balance for gross fixed assets. (Enter your answer in millions of dollars.) Gross fixed assets million
A drilling rig purchased by Challenge Industries should last 7 years. The purchase price was $82,500. Shipping costs were $1,567. The trade - in value is $17,870. Prepare a depreciation schedule using the 150% declining balance method, then enter the accumulated depreciation at the end of year 6 as your answer. (Round the declining balance rate to 4 decimal places, and all dollar amounts to the nearest cent)
You buy a property for $100,000 in year 0. The building is depreciated using straight-line depreciation over 27.5 year. The NOI is $5,000 in year 1 and grows at 2% thereafter. The building is sold at a the end of year 4 at a terminal cap rate of 6%. Assume an ordinary income tax rate of 35%, a capital gains tax rate of 20%, and a depreciation recapture tax rate of 25%. What is going to be the total tax bill on the sale? O 1,187 O 1,959 O 3,146 O 3,636
See the explanation below to work the problem. XYZ Company, a 'for-profit' business, had revenues of $12 million in 2022. Expenses other than depreciation totaled 75 percent of revenues. XYZ Company, must pay taxes at a rate of 40 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Depreciation originally was $1.5 million; however, a change in the depreciation schedule (still within GAAP) has now made the depreciation expense DOUBLE. Based on this change in depreciation expense, what would XYZ's net income now be? Select one or more: a. so b. $3,000,000 c. $1,500,000 Od. Not enough information to tell
Edwards Electronics recently reported $15,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 25%. How much was its net operating profit after taxes (NOPAT)? Select the correct answer. a. $6,324.00 b. $6,349.50 Oc$6,273.00 O d. $6,298.50 e. $6,375.00
Milagros Company is considering an investment in equipment for $60,000. Milagros uses the straight-line method of depreciation with no mid-year convention. In addition, its tax rate is 40 percent and the life of the equipment is five years with no salvage value. The expected income before depreciation and taxes is projected to be $30,000 per year. What is the payback period in years approximated to two decimal points? Group of answer choices 2.63 2.00 1.00 4.00
Holly Farms has sales of S509,600, costs of $448,150, depreciation expense of $36,100, and interest paid of SI2,400. The tax rate is 28 percent. How much net income did the firm carn for the period?