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- Suppose that you placed a commercial building (warehouse) in service inJanuary. The cost of property is $300,000, which includes the $100,000 value of land. Determine the amount of depreciation that is allowed during the first year of ownership.(a) $7,692(b) $5,128(c) $7,372(d)$4,915An insurance company is covered by occurrence reinsurance with a layer of 750 and an attachment of 250. In a given year, it experiences individual loss occurrences of 50, 850, 300, and 2,100. What are the annual aggregate gross and net loss amounts for the company?A-Design Inc., a federally incorporated company in Canada, specializing in the design and manufacturing of armrests for the wheelchair industry plans to produce and sell 15,000 armrests at $50 per unit in its third year of operation and has also planned $20,000 for marketing campaigns, $100,000 for electricity, $240,000 for salaries, $300,000 for production materials, $20,000 for overhead, $24,000 for rent and $10,000 for depreciation. A-Design has a debt of $100,000 at an annual simple interest rate of 5% and a 25% income tax rate. Stock image: MSOffice GNG2101 – Introduction to product development and management for engineers and computer scientists Questions 1. Produce A-Design’s income statement at the end of their third year and determine the operating income, earnings before taxes and net income. 2. As at December 31st , 2022, A-Design Inc. presented the following financial data: $320,000 in cash, $100,000 for inventory, $580,000 in equipment, $500,000 in bank loans, $300,000 in…
- 17.7 Rotana Construction, Inc., has operated for the last 21 years in a northern U.S. state where the state income tax on corporate revenue is 6% per year. Rotana pays an average federal tax of 23% and reports taxable income of $7 million. Because of pressing labor cost increases, liability insurance premium increases, and other cost increases, the president wants to move to another state to reduce the total tax burden. The new state may have to be willing to offer tax allowances or an interest-free grant for the first couple of years in order to attract the company. You are an engineer with the company and are asked to do the following. (a) Determine the effective tax rate for Rotana. (b) Estimate the state tax rate that would be necessary to reduce the overall effective tax rate by 10% per year. (c) Determine what the new state would have to do financially for Rotana to move there and to reduce its effective tax rate to 22% per year.Value added by a single firm is measured as total sales revenue O a. Plus indirect business taxes O b. minus the purchase of intermediate goods OC. Minus factor payments (labour and capital) O d. Plus depreciationHoward Bowen is a large-scale cotton farmer. The land and machinery he owns has a current market value of $10 million. Bowen owes his local bank $7 million. Last year Bowen sold $9 million worth of cotton. His variable operating costs were $7 million; accounting depreciation was $40,000, although the actual decline in value of Bowen's machinery was $60,000 last year. Bowen paid himself a salary of $50,000, which is not considered part of his variable operating costs. Interest on his bank loan was $400,000. If Bowen worked for another farmer or a local manufacturer, his annual income would be about $30,000. Bowen can invest any funds that would be derived if the farm were sold to earn 10% annually. (Ignore taxes.) What is Bowen's accounting profit? $1,210,000.00 $1,550,000 $1,560,000 $1,220,000.00 What is Bowen's economic profit? $1,210,000.00 $1,560,000 $1,550,000 $1,220,000.00
- Presented below is information pertaining to Delsnyder Specialty Foods, a calendar-year sole proprietorship, maintaining its books on the cash basis during the year. At year-end, however,A. J. Delsnyder's accountant adjusts the books to the accrual basis only for sales, purchases, ar cost of sales, an Adapted records depreciation to more clearly reflect business income. 1. Amounts due from customers totaled $ 7 ,900 at December 31. 2 . A review of the receivables at December 31, disclosed at an allowance for doubtful accounts of $1,100 should be provided. Delsnyder had recorded no bad debt los om inception of the company through December 31 . 3. The inventory amounted to $23,000 at December 31 , based on a physical count of goods priced at cost . No reduction to market was required. 4. On signing new lease on October 1, 2019, Delsnyder paid $ 8,400, representing 1 year’s rent in advance for the lease year ending October 1, 2020. The $7,500 annual rental under the old lease was paid on…Income tax depreciation is governed by the tax statutes while the accounting depreciation is governed by the accounting policies of the respective persons. Give the rationale for this dimension.Give typing answer with explanation and conclusion Chanveida finds a home listed for $48k. Similar homes in good condition sell for $60k (market value). She buys the home and then sells it. Her adjusted cost basis is $44,000, net sell price is $55,000, and overall tax rate is 30%. Assume no financing is used and there is no depreciation taken. Determine Chanveida's Net Profit from sale.
- 1. Price-level adjustment may be accomplished by using specific price indexes as well as a general price-level index. One possibility is to use a weighted-average price index for the firm's own mix of assets. 'What are the dangers here? 2. Contrast financial capital maintenance with physical capital maintenance. 3. Why might it be said that both constant dollar and current cost income numbers under SFAS No. 33 are “disaggregated?”37. Electronic Games is moving very quickly to introduce a new interrelated set of video games. The initial investment for equipment to produce the necessary electronic components is $9 million. The salvage value after 6 years is $700,000. Anticipated net contribution to income is $6 million the first year, decreasing by $1 million each year for 6 years, with all dollar amounts expressed in real dollars. Depreciation follows MACRS 5-year property, taxes are 40 percent, the real MARR is 18 percent, and inflation is 4 percent. d. Determine the FW of the after-tax cash flows. e. Determine the combined IRR of the after-tax cash flows. f. Determine the combined ERR of the after-tax cash flows.In tax year 1, an electronics-packaging firm hada gross income of $35,000,000, $6,000,000 in salaries, $7,000,000 in wages, $800,000 in depreciationexpenses, a loan principal payment of $200,000, anda loan interest payment of $150,000. Determine thenet income of the company in tax year 1