Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Problem : Depreciation as a Tax Shield
The term tax shield refers to the amount of income tax saved by deducting depreciation for income tax purposes. Assume that Rummy Company is considering the purchase of an asset as of January 1, 2014. The cost of the asset with a five-year life and zero residual value is $60,000. The company will use the double-declining-balance method of depreciation.
Rummy's income for tax purposes before recording depreciation on the asset will be $62,000 per year for the next five years. The corporation is currently in the 30% tax bracket.
RequiredCalculate the amount of income tax that Rummy must pay each year if
(a) the asset is not pur- chased and (b) the asset is purchased.
What is the amount of tax shield over the life of the asset?
What is the amount of tax shield for Rummy if it uses the straight-line method over the life of the asset?
Why would Rummy choose to use the accelerated method?
You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 9 percent, which is paid semiannually. Compute the price of the bonds based on semiannual anal..
the first year of operation for sommerville corporation was 2007. they authorized 5000000 shares of 2 par common stock
Shelby and Mortonson formed a partnership with capital contributions of $230,000 and $330,000, respectively. Their partnership agreement calls for Shelby to receive a $53,000 per year salary. Also, each partner is to receive an interest allowance equ..
Compute the standard cost of the ingredients for one gallon of wine. (Carry computations to two decimal places.)
Calculate the amount that will be reflected on the group income statement of Winter Ltd for the 2004 financial year end for equity accounting of associates. Comparative figures are not required. Show all workings.
The income statement and the balance sheet are produced using a worksheet, but a consolidated statement of cash flows is not. What process is followed for preparing a consolidated statement of cash flows?
Illustrate what is the amount and character of the gain Longworth will recognize on the sale if the sale proceeds were decreased to $15,000?
In what industry will a given percentage increase in production workers result in the largest percentage increase in output?
the company purchased treasury stock for $ 35,000 and paid dividends on common and preferred stock for $ 24,000. Determine amount of cash provided by or used for financing activities during the year.
What is the shareholder's debt basis at January 1,3012?
1.how are general long-term liabilities distinguished from other long-term liabilities of the government? how does the
Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of t..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd