Shield result in cash or noncash savings for bright horizons

Assignment Help Financial Management

Reference no: EM131955901

Bright Horizons Skilled Nursing Facility, an investor-owned company, constructed a new building to replace its outdated facility. The new building was completed on January 1, 2015, and Bright Horizons began recording depreciation immediately. The total cost of the new facility was $18,000,000, comprising (a) $10 million in construction costs and (b) $8 million for the land. Bright Horizons estimated that the new facility would have a useful life of 20 years. The salvage value of the building at the end of its useful life was estimated to be $1,500,000.

Using the straight-line method of depreciation, calculate annual depreciation expense on the new facility

Assuming a 40 percent income tax rate, how much did Bright Horizons save in income taxes for the year ended December 31, 2015, as a result of the depreciation recorded on the new facility (i.e., what was the depreciation shield)?

Does the depreciation shield result in cash or noncash savings for Bright Horizons? Explain.

Reference no: EM131955901

Questions Cloud

Determine the mass of water that has been frozen into ice : Ignoring the container and assuming that the heat exchanged with the surroundings is negligible, determine the mass of water that has been frozen into ice.

What group would you describe as the low-status group : What change were the people in Gooding trying to avoid? Why do you think they wanted to avoid this change? What tactics did they use to resist change?

Find the final velocity of ball with mass : Find the final velocity of ball with mass m1 = 40.0 g. In what direction does the ball move after collision?

What worksheet entries are needed in connection : What worksheet entries are needed in connection with the consolidation of this asset? Assume that the parent applies the partial equity method.

Shield result in cash or noncash savings for bright horizons : Does the depreciation shield result in cash or noncash savings for Bright Horizons? Explain.

What is the maximum possible temperature of the hot : If the water going into the heater has a temperature of 20°C, what is the maximum possible temperature of the hot water that each showering resident receives?

Compounding with different interest rates-moving cash flows : What would be the second year future value? What is the value in year 14 of a $900 cash flow made in year 5 when the interest rates are 9 percent?

Determine the specific heat capacity of the liquid : The mass of the glass and the liquid is the same. Ignoring the container that holds the glass and liquid and assuming that the heat lost to or gained

What changes were kyle and harrison trying to make : What changes were Kyle and Harrison trying to make? How did these changes affect the beliefs, attitudes, or values of the players?

User Account

All Pages