A corporation has annual sales of $1,500,000 and costs of $698,000 in the first year. A plant is installed at a cost of $1,200,000. It will be depreciated straight line to zero in its useful life of 4 years. The tax rate is 35%. Calculate the operating cash flow for the first year.

A corporation has annual sales of $1,500,000 and costs of $698,000 in the first year. A plant is installed at a cost of $1,200,000. It will be depreciated straight line to zero in its useful life of 4 years. The tax rate is 35%. Calculate the operating cash flow for the first year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A corporation has annual sales of $1,500,000 and costs of $698,000 in the first year. A
plant is installed at a cost of $1,200,000. It will be depreciated straight line to zero in its
useful life of 4 years. The tax rate is 35%. Calculate the operating cash flow for the first
year.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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