Borsberry Medical has a gross income of $7million for the year. Depreciation and operating expenses total $5 million. The combined state and local tax rate is 7.6%. (a) Use an effective federal rate of 34% to estimate the income taxes. (b) Borsberry’s president hopes to have a total of $2 million left after taxes. What reduction in OE is necessary to realize this goal if the effective tax rate and depreciation are constant?

Borsberry Medical has a gross income of $7million for the year. Depreciation and operating expenses total $5 million. The combined state and local tax rate is 7.6%. (a) Use an effective federal rate of 34% to estimate the income taxes. (b) Borsberry’s president hopes to have a total of $2 million left after taxes. What reduction in OE is necessary to realize this goal if the effective tax rate and depreciation are constant?

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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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