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

Hello, Hello, I'm having trouble understanding Direct Cost, Overhead Cost a...

Hello, I'm having trouble understanding Direct Cost, Overhead Cost and Indirect Cost. ***Also Period cost and Product cost. please can anyone explain it and give examples for eac

Cost accounting, The industrial revolution in England presented a challenge...

The industrial revolution in England presented a challenge to the development of accounting like a tool of industrial management. Costing techniques were urbanized as guides to man

Gender for the moment, The CPSdata to re-estimate the difference among aver...

The CPSdata to re-estimate the difference among average male and female pay. Use for example, the regression LS LNWAGE C FE a.  Can you avoid the hypothesis that mean female

Non-current assets, What should companies not show as non-current assets in...

What should companies not show as non-current assets in their balance sheets? A  plant bought on hire purchase B  plant fully depreciated C  plant held on finance leases D  pla

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

Allowance for uncertain accounts, Normal 0 false false fals...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Pattillo industries makes a product that sells, Pattillo Industries makes a...

Pattillo Industries makes a product that sells for $25 a unit. The product has a $5 per unit variable cost and total fixed costs of $9,000. At budgeted sales of 1,000 units, the

Explain the schedule of accounts payable, Schedule of Accounts Payable  ...

Schedule of Accounts Payable  Lists the balances of accounts payable ledger, and Accounts Payable controlling account demonstrates the total amount owed to ALL creditors. Th

Controller - chief accountant, Controller: Controller another name for Chi...

Controller: Controller another name for Chief Accountant is generally the head of the whole region of accounting, including internal audit. He is generally in charge of all types

The tds deduction & service charges for fy 2011- 2012 is?, It is reduction ...

It is reduction of taxes where from the income is produces and regarding services to be taxed there are about 120 services which are taxed in India for provision of service tax

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