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

Full disclosure, What is the full disclosure principle

What is the full disclosure principle

Explain about the recording purchases, Explain about the RECORDING PURCHASE...

Explain about the RECORDING PURCHASES Source document for recording a purchase of merchandise is purchase invoice. o An instance of a transaction of purchasing merchandise

Explain the scope of accounting standards, Fundamental of Accounting 1....

Fundamental of Accounting 1. Explain the concept of accrued income with the help of an example. 2. Explain the five disadvantages of Single Entry System? 3. Explain the s

What is depreciation, Q. What is Depreciation? Depreciation -- an expen...

Q. What is Depreciation? Depreciation -- an expense which is supposed to reflect the loss in value of a fixed asset. Forinstance if a machine will entirely wear out after ten y

State about the balance sheet columns of worksheet, State about the Balance...

State about the Balance Sheet columns of worksheet Balance Sheet columns of worksheet would comprise the amounts from Adjusted Trial Balance columns which are assets, capital,

Income statements - service and merchandising company, Q. Income statements...

Q. Income statements - Service and merchandising company? We evaluate the main divisions of an income statement for a service company with those for a merchandising company. To

Principle of accounting I, the terms debit and credit are synonymous with l...

the terms debit and credit are synonymous with left and right.

Difference between fica and federal income taxes, Difference between Fica a...

Difference between Fica and federal income taxes  Employers should file Form 940 with the IRS at the end of every calendar quarter. There are several rules about when to turn i

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