Financial Accounting Question Henderson Technologies, Inc. provided the following forecasted financial datafor Year 3:.Sales Revenue $75,000Cost of Goods Sold (COGS) - $58,500Other Operating Expenses = $5,200Interest Expense = $1,100Depreciation Expense (varies by method)The company is considering two different depreciation methods:1. Straight-Line Depreciation - $4,000 per year2. Double-Declining Balance (DDB) Depreciation - $6,500 for Year 3Required: Prepare an income statement for Year 3 under each depreciationmethod, ending at Income before Income Tax Expense.

Step 1: Definition of Income StatementAn Income Statement is a financial document that shows a…

Answered: Henderson Technologies, Inc. provided…

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets

Section: Chapter Questions

Problem 1CP

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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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Given the following information for O'Hara Marine Co., calculate the depreciation expense: sales = $67,000; costs = $34,500; addition to retained earnings = $8,300; dividends paid = $2,320; interest expense = $2,650; tax rate = 21 percent. (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) What is the depreciation expense?
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What is the annual depreciation charge of this financial accounting question?
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
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In January 2009, the Status Quo Company was formed. Total assets were $593,000, of which $351,000 consisted of depreciable fixed assets. Status Quo uses straight-line depreciation of $35,100 per year, and in 2009 it estimated its fixed assets to have useful lives of 10 years. Aftertax Income has been $43,000 per year each of the last 10 years. Other assets have not changed since 2009. a. Compute return on assets at year-end for 2009, 2011, 2014, 2016 and 2018 Note: Input your answers as a percent rounded to 2 decimal places. Year 2009 2011 2014 2016 2019 Return on Assets % % % % b. To what do you attribute the phenomenon shown in part a Increase in current assets Annual depreciation charges Increase in market share. Return on assets will be 4 c. Now assume income increased by 10 percent each year. What effect would this have on your answers to perta?
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?-
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1. A set of office equipment costs $100,000 and has a useful life of 6 years. Its estimated market value at the end of the 6th year is $5,000. Determine the depreciation amount on the 4th year and the book value at the end of the 3rd year using: a. Straight Line Method b. Double Declining Balance Method c. Sum- of - Years Digits Method d. Declining Balance Method with Switchover to SL e. MACRS GDS (assume that the assets will be disposed of on the 3rd year) f. MACRS ADS
Quantum Electronic Services paid P = $40,000 for its networked computer system. Both tax and book depreciation accounts are maintained. The annual tax depreciation rate is based on the previous year’s book value (BV), while the book depreciation rate is based on the original first cost (P). Use the rates listed to plot annual depreciation and book values for each method. Develop the graphs using hand calculations or a spreadsheet, as directed by your instructor.

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