General accounting question Eagle Manufacturing recorded $320,000 in amortization expenses forits intangible assets in the current fiscal year. What will be theamount of its tax shield if the company's effective tax rate is 25%?

Step 1: Define Tax ShieldA tax shield refers to the reduction in taxable income due to allowable…

Answered: Eagle Manufacturing recorded $320,000…

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

What is the amount of its tax shield on these financial accounting question?
A new piece of equipment costs $500,000, and depreciated according to the 5 year MACRS schedule. Assume the equipment makes you earn 350,000 a year more, and increases the operating expenses by $100,000 annually. Assume a federal applicable tax rate of 32%. For year 2, calculate: (a) before tax cash flow (BTCF) (b) taxable income (c) taxes due (d) after tax cash flow (ATCF)
During 2021, Raines Umbrella Corporation had sales of $860,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $110,000, and $125,000, respectively. In addition, the company had an interest expense of $87,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume that interest is fully deductible.) a. What is the company's net income for 2021? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.) b. What is its operating cash flow? (Do not round intermediate calculations.) a. Net income b. Operating cash flow
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $299,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $181,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $ (Round to the nearest dollar.)
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $298,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $179,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $ (Round to the nearest dollar) b. If Jones sells the equipment today for $179,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? The total after-tax proceeds from the sale will be $. (Round to the nearest dollar.)
During 2021, Raines Umbrella Corporation had sales of $760,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $550,000, $90,000, and $95,000, respectively. In addition, the company had an interest expense of $94,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume that interest is fully deductible.) a. What is the company's net income for 2021? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.) b. What is its operating cash flow? (Do not round intermediate calculations.)
The 2020 financial statements for Leggett & Platt, Inc. report the following information: Year ended December 31, 2020 (In millions) Depreciation expense $84.6 Net income 275.6 Equipment 620.3 Building 1071.7 Land 37.7 Accumulated depreciation and 1.165.4 amortization 564.3 PPE, net
Liberty Contractors records depreciation of $50,000 per year for three years. For tax purposes, the company has the following schedule of depreciation expense: = Year 1 $62,000 Year 2 $50,000 = Year 3 = $38,000 Assume that each year Liberty makes $120,000 of income before depreciation expense and that the company has a 40% effective tax rate. What is the amount of tax expense, tax liability, and deferred tax liability for Year 2?
During 2021, Raines Umbrella Corporation had sales of $860,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $680,000, $85,000, and $180,000, respectively. In addition, the company had an interest expense of $55,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume interest expense is fully deductible.) Suppose the company paid out $65,000 in cash dividends. If net capital spending and net working capital were both zero, and if no new stock was issued during the year, what is the net new long-term debt? (Do not round intermediate calculations.) Answer is complete but not entirely correct. Net new long-term debt $ 205,000 X
During 2021, Raines Umbrella Corporation had sales of $830,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $575,000, $125,000, and $145,000, respectively. In addition, the company had an interest expense of $80,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume interest expense is fully deductible.) Suppose the company paid out $59,000 in cash dividends. If net capital spending and net working capital were both zero, and if no new stock was issued during the year, what is the net new long-term debt?
Greenville Industries uses the accrual basis to account for all sales transactions. Sales for 2022 total $500,000. Included in this amount is $70,000 in receivables from sales on installment. Installment sales are considered revenue for book purposes, but not for tax purposes. Operating expenses total $170,000 and are treated the same for book and tax purposes. Assuming a 40% tax rate, what is the amount of Greenville's deferred tax asset or liability? OA. $14,000 deferred tax liability B. $28,000 deferred tax liability OC. $28,000 deferred tax asset OD. $14,000 deferred tax asset
Grove Media plans to acquire production equipment for $845,000 that will be depreciated for tax purposes as follows: year 1, $329,000; year 2, $189,000; and in each of years 3 through 5, $109,000 per year. A 10 percent discount rate is appropriate for this asset, and the company’s tax rate is 20 percent. Required: Compute the present value of the tax shield resulting from depreciation. 2. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($169,000 per year).

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

Eagle Manufacturing recorded $320,000 in amortization expenses for its intangible assets in the current fiscal year. What will be the amount of its tax shield if the company's effective tax rate is 25%?