A company leases a machine on January 1, Year One for five years which call for annual payments of $4,000 for the first year and then $10,000 per year after that. The present value of these payments based on a reasonable interest rate of 10 percent is assumed to be $38,000. This lease
Net initial investment outlay is $302,040. (Cost of new system + Installation) + (Proceeds from old equipment + Tax on proceeds + Removal cost) = Total cost + NCF (old) = 303,000 +-960 2. Tax depreciation savings = (36% tax rate) x (depreciation of each year) Depreciation for each year based on MACRS 5-year (Wikipedia) 3. Incremental cash flows = (Deprn. Tax savings + A.T. cost savings) each year [pic]2.
SciTronics’ profit as a percentage of sales in 2008 was 5.7 %. 2. This represented an increase from 3.4 % in 2005. 3. SciTronics had a total of $ 102,000 (75,000 + 27,000) of capital at year-end 2008 and earned before interest but after taxes (EBIAT) $ 16,120 (avg.
What was Brady Brothers cash basis income? Cash basis income: $6,000 (cash received) - $5,000 (cash paid) = Answer: $1,000 Question 3: What was Brady Brothers accrual basis income? Accrual basis income: $12,000 (revenue earned) - $8,000 (expenses incurred) = Answer: $4,000 Question 4: Anderson Company’s balance sheet at the end of the year revealed the following information: Clients owe Anderson Company $35,300 for completed projects. Anderson Company owns office equipment totaling $95,500. Anderson Company owns $5,000 of material used on various client projects.
What factors should be considered in electing the tax year? DQ 2 What is the legislative intent behind the corporate alternative minimum tax (AMT)? Define tax reference items, AMT adjustment, and minimum tax credit Week 3 Learning Team Week Three Problem Set Complete the problems found in Ch. 3 & 5 of Prentice Hall’s Federal Taxation 2010: Corporations with your Learning Team. C:3-3 Discussion Question – Case Scenario on Tax Elections (Ch.
| Quality of financial system in which country the company is operating, i.e., how available debt is. | Source: Financial Management; Theory and Practice http://creditexpert.dnb.com/small-business-information/the-difference-between-business-risk-and-financial-risk/ b. When a company only finances through equity total risk is defined by business risk. But when it is the combination of equity financing and debt financing, total risk is the combination of business risk and financial risk. Total risk can be measured by company’s Return on Equity (ROE).
Discussion Questions DQ 1 What is meant by an in-substance defeasance, and how can a government use it to lower its interest costs? How must it recognize a gain or loss on defeasance if it accounts for the debt in a proprietary fund?How do the GASB standards pertaining to in-substance defeasances differ from those of the FASB? DQ 2 What is an encumbrance? How does an encumbrance affect expenses and expenditures? What is the impact of encumbrance accounting on a governmental budget?
This determines the point in which a profit begins to be turned. c. What deficiencies does payback have as a capital budgeting decision method? d. Does payback provide any useful information regarding capital budgeting decisions? e.
Financial Statements ACC/290 August 13, 2012 Paul Dommes Financial Statements A business’ success or failure is based on numbers - the bottom line. Financial statements communicate these numbers to users, both internal and external, in a group of documents called financial statements. The financial statements are the income statement, the retained earnings statement, the balance sheet, and the statement of cash flows. The results of one statement become an input in another interrelating them. The first statement is the income statement.
Bond Interest Income of $ 160,000 was accrued at the end of year. Refunds of $ 150,000 were made in cash to terminated, non-vested participating employees. Common stocks, which are carried at a fair value of $ 500,000, were sold for $472,000. The amount of the sales price of the stock plus an additional $ 360,000 was invested in stocks. As of the end of the fiscal year, June 30, 2012, a determination has been made that the fair value of the stocks held by the pension plan had decreased by $ 60,000; the fair value of bonds had increased by $35,000.