Maximum cca , Accounting Basics

Assignment Help:

Home Inc. is considering buying a new piece of equipment, which will cost $715,000 and has an economic life of 5 years, in order to make a new line of product.  The company believes they can sell 25,000 units of this latest product per year at $130 per unit in every of next 5 years.  The unit variable cost is $110 and total fixed costs (excluding CCA) are $195,000 per year.

The CCA rate for the latest equipment is 30% and Home Inc. is going to claim the maximum CCA in every of the next 5 years.

Home Inc. requires to invest $140,000 in net working capital up front which will be fully recovered at the end of 5 years.

The equipment is estimated to be sold at its UCC value at the finish of 5 years.

The discount rate is 15% and the tax rate is 35%.

Requirements: Show your calculation

a.    Determine the CCA allowance and ending UCC in each of the 5 years.

b.    Determine the net income and operating cash flow of this new product for every of the 5 years.

c.    Determine the initial investment outlay.


Related Discussions:- Maximum cca

Operational research, the scope of operation research in modern management

the scope of operation research in modern management

Classify the following items as, Classify the following items as (a) defer...

Classify the following items as (a) deferred expense (prepaid expense), (b) deferred revenue (unearned revenue), (c) accrued expense (accrued liability), or (d) accrued reven

Procedure, procedure followed in government system of accounting in india

procedure followed in government system of accounting in india

Financial accounting, It dates from the development of huge scale business ...

It dates from the development of huge scale business and the advent of Joint Stock Company as a form of business that enables the public to participate in giving capital in return

Annual interest of 5% paid if balance exceeds, Annual interest of 5% paid i...

Annual interest of 5% paid if balance exceeds 800, $7 monthly fee if account falls below minimum balance, average monthly balance $1,160, account falls below $800 during 5 months

Survey of accounting.., norman co borrows $15,000 with a 8%interest 38,000 ...

norman co borrows $15,000 with a 8%interest 38,000 account receivable paid $26,000 salary

Fixed assets, Fixed Assets An additional categorization other than curr...

Fixed Assets An additional categorization other than current or long-term is as well used for property. A "fixed asset" is an asset which is planned to be of a lasting nature a

How to determine inventory cost, Q. How to determine inventory cost? To...

Q. How to determine inventory cost? To place the proper evaluation on inventory a business must answer the question: Which costs must be included in inventory cost? After that

State and local income taxes, State and local income taxes Some states ...

State and local income taxes Some states also withhold state income taxes. Texas doesn't. If state withholds taxes, there will be form similar to the federal one to determine t

The owner''s equity of logan''s company, The owner's equity of Logan's comp...

The owner's equity of Logan's company is equal to one quarter of the total assets. Liabilities equal $60,000. What is the amount of owner's equity?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd