Calculate taxable income
• LO16–1, LO16–4
Shannon Polymers uses straight-line
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- BE 10-1 Acquisition cost; equipment LO10-1 Beaverton Lumber purchased milling equipment for $35,000. In addition to the purchase price, Beaverton made the following expenditures: freight, $1,500; installation, $3,000; testing, $2,000; personal property tax on the equipment for the first year, $500. What is the initial cost of the equipment?arrow_forward11-8 Book value and taxes on sale of assets Troy Industries purchased a new machine 3 years ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the percentages given in Table 4.2 on page 000. Assume a 40% tax rate. a. What is the book value of the machine? b. Calculate the firm's tax liability if it sold the machine for each of the following amounts: $100,000; $56,000; $23,200; and $15,000.arrow_forwardmols S ▪ it ST ENO Your The new equipment will have a cost of $1,800,000, and it is eligible for 100% bonus depreciation so it will be fully depreciated at 1-0. The old machine was purchased before the new tax law, so it is being depreciated on a straight-line basis. It has a book value of $200,000 (at year 0) and four more years of depreciation left ($50,000 per year). The new equipment will have a salvage value of 50 at the end of the project's life (year 6). The old machine has a current salvage value (at year 0) of $300,000. Replacing the old machine will require an investment in net operating working capital (NOWC) of $60,000 that will be recovered at the and of the project's life (year 6). The new machine is more efficient, so the firm's incremental earnings before interest and taxes (EBIT) will increase by a total of $400,000 in each of the next six years (years 1-6). Hint: This value represents the difference between the revenues and operating costs (including depreciation…arrow_forward
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- > Question 36 On September 1, 20x1 Jackson Company paid $170,000 to purchase equipment that has an estimated life of 8 years and an estimated residual value of $30,625. Jackson will depreciate the equipment using sum-of-the-years-digits. Calculate what depreciation expense for 20x2. SHOW YOUR WORKarrow_forwardQuestion 13 On Jan. 1, 2021, Manama Company purchased an equipment at a price of $100,000 and paid tax of 10% of this price. Manama Company paid $2,500 for power connections and $6,000 to assemble the equipment. During installing the equipment, a small damage occurred and repaired for a cost of $500. The equipment's cost is: OA. $ 100,000 O B. $ 119,000 OC.$ 118,500 O D.$ 109,000arrow_forward8.1 Company A pay VAT by the tax deduction method, on December of year N have the situation of fixed assets as follows: (Unit: 1,000 VND). Given that all payments are made by cash in bank 1. Purchased a machine for 70.000 which is used at the factory. In addition to the purchase price, company A made the following expenditures: freight, 3.000; installation, 6.000; testing, 4.000. It is sponsored by the Developing investment funds. 2. Purchased land and a warehouse for 1.200.000. In addition to the purchase price, company A made the following expenditures: broker's commission, 12.000; transferred tax, 6.000. An independent appraisal estimates the fair value of the land and warehouse at 840.000 and 560.000, respectively. 3. Sold an equipment for 6.600 (included 10% VAT). Its cost was 60.000 and accumulated depreciation through the disposal date was 52.000. Company also paid 500 commission to broker. 4. Exchanged an older model machine for a new model. The old model had original cost of…arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
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