How to calculate the answer of Tax Allowable depreciation?
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A:
Q: Describe the Depreciation methods for Book and Tax Depreciation?
A: Meaning of Depreciation Depreciation is an indirect expense allocated to the fixed assets showing…
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Q: Briefly describe the tax depreciation system under MACRS.
A: MACRS is an abbreviation of the Modified Accelerated Cost Recovery System. The present U.S. tax…
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A: Tax planning is the examination of a financial condition or plan to make sure that all parts work…
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A: There are different types of Depreciation method. They are: 1) Straight Line Method 2) Declining…
Q: What is the Tax depreciation method?
A: Tax depreciation is the depreciation cost asserted on a government form by a citizen to represent…
Q: main purpose of the property tax
A: Option A is wrong because there is no need of property tax to forecast overheads. Option C is wrong…
Q: Which of the following situations will result in a future deductible amount? Carrying amount of…
A: Future taxable amount is the amount which increase tax liability in future and for that create…
Q: What is the valuation allowance for deffered tax asset
A: Deferred tax asset(DTA) arises due to payment of higher tax in current year due to the variance…
Q: The value of property for tax purposes, usually a percentage of the fair market value is known as…
A: Appraisal value refers to that on a specific date, the specific property’s current market value is…
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A: How do taxpayers determine whether they should deduct their itemized deductions or utilize the…
Q: Discuss the Depreciation method for tax purposes?
A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to…
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A: Itemized deduction is the amount of deduction that is subtracted from the gross income and it…
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A: What is Inheritance Tax?Inheritance Tax (IHT) is a tax on the estate of someone who has died,…
Q: Describe Tax Depreciation Methods?
A: Depreciation is a non-cash expense for the company. The depreciation expenses is charged because the…
Q: Describe the Replacement Analysis with Tax Considerations?
A: Introduction: Capital budgeting is one of the important techniques used to determine the value that…
Q: What are the deductibility of real property taxes
A: Property taxes and real property taxes are interchangeable terms. They are levied on the majority of…
Q: Describe the techniques of depreciation available to individuals under the income tax code.
A: Tax depreciation alludes to a company's depreciation costs that are deductible by the IRS. This…
Q: How can we use Replacement Analysis with Tax Considerations?
A: Using of replacement analysis with tax consideration help the investor in order to select the best…
Q: How can we determine the annual depreciation for tax purposes?
A: Depreciation Depreciation refers to a constant reduction in the cost of an asset. There are two ways…
Q: Please discuss the deductibility of real property taxes.
A: Local governments and municipal corporations collect property taxes annually from landowners.
Q: appropriate data into the tax-accounting program. What are the values of B, n, and S in depreciating…
A: B = Purchase price + Transportation cost + Installation cost S = 10% of purchase price n =…
Q: describe the valuation allowance for deferred tax assets—when it is required and what impact it has…
A: Valuation Allowance: Deferred tax assets should be assessed on every balance sheet date. If it is…
Q: How does depreciation give tax benefits? What are the advantages of Internal Financing?
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Explain deferred tax assets.
A: Temporary Difference: Temporary difference refers to the difference of one income recognized by the…
Q: Given the frequently changing nature of depreciation and tax law,what must we use?
A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to…
Q: What is Tax Depreciation?
A: Depreciation: Depreciation is a method of reducing the capitalized cost of long-lived operating…
Q: Describe the procedure to incorporate the tax effects of gains (or losses) whenever an asset is…
A: Asset are considered to be capital items as they are held for more than a year and provide economic…
Q: Define tax depreciation methods
A: Tax: Tax can be defined as the compulsory fees charged by the government of the country or the…
Q: Illustrate the significance of depreciation and income taxes?
A: Depreciation is the charge against the usage, wear and tear or obsolescence of the asset in the…
Q: What are the benefits of calculating depreciation differently for financial reports and for tax…
A: Depreciation means decline in the estimation of benefit inside its valuable life because of mileage…
Q: what are the main objectives of the deferred tax asset approach?
A: Items on a company's balance sheet that may be used to reduce taxable income in the future are…
Q: Question: Explain the tax consequence of such awards
A: Tax is the amount which is paid by the taxpayer on the earnings earned during the year on the tax…
Q: Will the existence of unused tax losses always lead to the recognition of a deferred tax assets?…
A: SOLUTION- DEFERRED TAX = IT REFERS TO EITHER A POSITIVE (ASSETS) OR NEGATIVE (LIABILITY) ENTRY ON…
Q: How can we determine the amount of property taxes over the machine's depreciable life?
A: Depreciation indicates the fall in the historical cost of fixed assets due to normal business…
Q: Describe income tax methods of depreciation.
A: The concept of depreciation applies to both tax and accounting practices. For taxation purposes,…
Q: How does the tax depreciation methods generally permit a higher depreciation than the book…
A: Book Depreciation: Book Depreciation means the amortization expense amount which are recorded in…
Q: How, and why, does the depreciation reported for tax purposes differ from that reported in the…
A: Depreciation is the amount to be written off periodically to charge the decline in value of a fixed…
Q: What is the proper term for depreciation methods used for tax purposes? Provide the acronym and the…
A: Proper Term Used for depreciation for Tax Purpose: The term used for Depreciation is MACRS Full…
Q: Describe when and how a valuation allowance is recorded for deferred tax assets.
A: Deferred tax asset: When Income Tax Expense account is more than the Income Tax Payable account,…
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- The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has an initial after-tax cost of 170,000. The project will produce 1,000 cases of mineral water per year indefinitely, starting at Year 1. The Year-1 sales price will be 138 per case, and the Year-1 cost per case will be 105. The firm is taxed at a rate of 25%. Both prices and costs are expected to rise after Year 1 at a rate of 6% per year due to inflation. The firm uses only equity, and it has a cost of capital of 15%. Assume that cash flows consist only of after-tax profits because the spring has an indefinite life and will not be depreciated. a. What is the present value of future cash flows? (Hint: The project is a growing perpetuity, so you must use the constant growth formula to find its NPV.) What is the NPV? b. Suppose that the company had forgotten to include future inflation. What would they have incorrectly calculated as the projects NPV?Big Sky Mining Company must install 1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply. (1) The machinery falls into the MACRS 3-year class. (2) Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance. (3) The firms tax rate is 25%. (4) The loan would have an interest rate of 15%. It would be nonamortizing, with only interest paid at the end of each year for four years and the principal repaid at Year 4. (5) The lease terms call for 400,000 payments at the end of each of the next 4 years. (6) Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of 250,000 at the end of the 4th year. a. What is the cost of owning? b. What is the cost of leasing? c. What is the NAL of the lease?Camden Limited is company which specializes in the manufacture of large scale replacement parts for passenger airplanes.The company is considering investing R40million in equipment which will generate a net cash flow of R16million per year forfour years. The company is able to depreciate the equipment at a rate of 20% per year on a straight-line basis for tax purposes.The market value of the equipment at the end of four years is expected to be R15 million. The difference between the marketvalue and the equipment’s tax value (cost less depreciation to date of sale) is termed a recoupment which in this case is subjectto tax. The corporate tax rate is 28%. The company’s cost of capital is 14%. Required: Calculate the project’s NPV and IRR of the project. Note: show all calculations.
- Sadik Industries must install $1 million of new machinery in its Texas plant. It can obtain a 6-year bank loan for 100% of the cost at a 14% interest rate with equal payments at the end of each year. Sadik’s tax rate is 25%. The equipment falls in the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.)Alternatively, a Texas investment banking firm that represents a group of investors can arrange a guideline lease calling for payments of $320,000 at the end of each year for 3 years. Under the proposed lease terms, the Sadik must pay for insurance, property taxes, and maintenance.Sadik must use the equipment if it is to continue in business, so it will almost certainly want to acquire the property at the end of the lease. If it does, then under the lease terms, it can purchase the machinery at its fair market value at Year 3. The best estimate of this market value is $200,000, but it could be much higher or lower under…Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow (A) Cash Flow (B) 0 −$ 56,000 −$ 101,000 1 22,500 24,500 2 29,600 29,500 3 24,500 29,500 4 10,500 239,000 What is the payback period for each project? Which, if either, of the projects should the company accept?The new venture requires an import of equipment from the UK at the cost of Rs.1,000,000. Further, it will cost the company Rs. 200,000 for shipping charges, installation and testing the equipment, etc. There will be an increase of Rs. 500,000 in working capital if the company starts this project. The existing equipment is sold at Rs. 10,000 at the book value, means at no profit no loss. The operating profit excluding the tax depreciation is expected to be: Calculate the initial cash outflow Please don't explain in excel
- Pharma, Inc, manufactures and distributes pharmaceutical products. It is considering buying the rights to make and sell a new drug created by a drug development laboratory A&B Ltd., which develops new drugs but generally lets others manufacture and distribute them. A&B Ltd. Will send the rights to the products to Pharma for 1 billion. The net after-tax cash flow generated by the drug is expected to be P150 million in 1 year and to grow at 20% per year for the following four years, at which point (in year 5) the remaining value (or terminal value) of the drug is expected to be P500 million. Suppose the risk-free rate of return is 4% and Pharma has determined that 8% is the appropriate opportunity cost of funds for this project. Pharma needs to decide whether to go ahead and purchase the rights to the new drug. Should the company go ahead with the purchase? Why?Pharma, Inc, manufactures and distributes pharmaceutical products. It is considering buying the rights to make and sell a new drug created by a drug development laboratory A&B Ltd., which develops new drugs but generally lets others manufacture and distribute them. A&B Ltd. Will send the rights to the products to Pharma for 1 billion. The net after-tax cash flow generated by the drug is expected to be P150 million in 1 year and to grow at 20% per year for the following four years, at which point (in year 5) the remaining value (or terminal value) of the drug is expected to be P500 million. Suppose the risk-free rate of return is 4% and Pharma has determined that 8% is the appropriate opportunity cost of funds for this project. Pharma needs to decide whether to go ahead and purchase the rights to the new drug. Should the company go ahead with the purchase? Why? Pease show formula and solution. Not in spreadsheet calculation• Shell Company is considering two mutually exclusive projects. Each require an initial investment of OMR 150,000.The after tax cash inflows associated with each project is as follows: ###The table in the picture#### (a) Calculate the payback period for project X &Y. (b) Which project should the company will invest in and why (by considering X&Y are mutually exclusive projects)? (c) If X and Y are independent projects and maximum payback period for company is 5 years, which project(s) company will accept and why?
- Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2,213,393. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be worthless. The project is estimated to generate $2,122,927 in annual sales, with costs of $1,735,170. If the tax rate is 0.24 , what is the OCF for this project?The initial investment in machinery would be $8 million immediately and the project is expected to last for three years. Investment in machinery receives tax allowable depreciation of 25% per annum on a straight-line basis. Allowances are receivable one year in arrears. The machinery will be sold at the end of the project for $5 million, in year 3 prices. And the answer is in the picture. How to calculate the answer of Tax Allowable depreciation?AZA Ltd is considering the purchase of a machine for R2 750 000, which would be sold after seven years for an estimated realisable value of R1 200 000. By this time capital allowances of R2 150 000 would have been claimed. The rate of corporation tax is 28%. Required What will be the tax payment on the balancing charge at the end of the five years? a. R182 000 b. R322 000 c. R168 000 d. R84 000