Fill in the missing numbers for the following income statement. (Do not round intermediate calculations.) $ Sales Costs Depreciation EBIT Taxes (24%) Net income 665,600 427,800 102,200 a. Calculate the OCF. (Do not round intermediate calculations.) b. What is the depreciation tax shield? (Do not round intermediate calculations.) a. OCF b. Depreciation tax shield

Fill in the missing numbers for the following income statement. (Do not round intermediate calculations.) $ Sales Costs Depreciation EBIT Taxes (24%) Net income 665,600 427,800 102,200 a. Calculate the OCF. (Do not round intermediate calculations.) b. What is the depreciation tax shield? (Do not round intermediate calculations.) a. OCF b. Depreciation tax shield

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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6. Fill in the missing numbers in the following income statement: (Do not round intermediate calculations.)Requirement 1: Sales $ 659,000 Costs 420,100 Depreciation 98,900 Requirement 1: find EBIT, Taxes (40%) and Net income. Requirement 2: What is the OCF? Requirement 3: What is the depreciation tax shield?
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Consider the scenario shown below, in which a company uses straight-line depreciation over 3 years for Book purposes but accelerated depreciation for Tax purposes. The Book version contains all the calculations, and the Tax version is mostly blank:
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Required Answer each of the following questions by providing supporting computations. 1. Assume that the company’s income tax rate is 30% for all items. Identify the tax effects and after-tax amounts of the three items labeled pretax. 2. Compute the amount of income from continuing operations before income taxes. What is the amount of the income tax expense? What is the amount of income from continuing operations? 3. What is the total amount of after-tax income (loss) associated with the discontinued segment? 4. What is the amount of net income for the year?
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The use of accelerated depreciation for tax purposes and straight-line depreciation for accounting purposes results in: O The asset being fully depreciated for tax purposes in half the time it takes to become fully depreciated for accounting purposes. O A larger amount of depreciation expense shown on the tax return than on the income statement over the asset's useful life. O A larger amount of depreciation expense shown on the income statement than on the tax return in the last year of the asset's useful life. O A loss on the sale of the asset in question if it is sold for its book value before its useful life expires.
Compute the following. 1. Total gain. 2. Contract price. 3. Payments received in the year of sale. 4. Recognized gain in the year of sale and the character of such gain. а. (Hint: Think carefully about the manner in which the property taxes are han- dled before you begin your computations.) b. Same as parts (a)(2) and (3), except that Kay's basis in the property was $35,000.
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Select all that are true with respect to depreciation. Group of answer choices Depreciation is a cash flow outflow at the time it is recorded in the financial statements Depreciation itself is not a cash flow Accounting depreciation impacts cash flow, Tax depreciation does not Accounting depreciation does not impact cash flow, Tax depreciation does impact cash flow The depreciation tax shield is a relevant cash flow for decision making
Which of the below are the correct adjustments we make to a company's EBIT to arrive at its FCFF? Select all that apply. Select All That Apply A B D E F Take out taxes Subtract depreciation and amortization Subtract capital expenditures Add back acquisition expenses Subtract changes in net working capital Add back R&D expenses ?