Senior management of Telemark Skiing Ltd wishes to capitalise $2 650 000 in ski-hill improvement costs expended this year, and amortise the capitalised costs over 10 years, rather than just expensing them all as is now done. The company’s income tax rate is 30 per cent, and the company would plan to continue deducting the costs as expenses in computing income tax payable for this year, assuming the tax authorities would permit that. What would be the effect on this year’s net profit?
Senior management of Telemark Skiing Ltd wishes to capitalise $2 650 000 in ski-hill improvement costs expended this year, and amortise the capitalised costs over 10 years, rather than just expensing them all as is now done. The company’s income tax rate is 30 per cent, and the company would plan to continue deducting the costs as expenses in computing income tax payable for this year, assuming the tax authorities would permit that. What would be the effect on this year’s net profit?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter3: Taxes On The Financial Statements
Section: Chapter Questions
Problem 22P
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Senior management of Telemark Skiing Ltd wishes to capitalise $2 650 000 in ski-hill improvement costs expended this year, and amortise the capitalised costs over 10 years, rather than just expensing them all as is now done. The company’s income tax rate is 30 per cent, and the company would plan to continue deducting the costs as expenses in computing income tax payable for this year, assuming the tax authorities would permit that. What would be the effect on this year’s net profit?
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