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

Prepaid rent- factory was amortized, Create an adjusted trial balance & jou...

Create an adjusted trial balance & journal entries Bank charges of $932.70 were not recorded in the books for 2014. These were credit card fees charged by the bank for Edwards

Planning and budgeting, Consider the following 2008 data for Newark General...

Consider the following 2008 data for Newark General Hospitals (in millions of dollars Simple Budget_______Flexible Budget_ Actual Budget__ Revenue______$4.7$____4.8_____$4.5____.

Scott manufacturing co.''s static budget at 10, Scott Manufacturing Co.'s s...

Scott Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $23,000. At 12,000 un

Open item managed account, Explain What do you recognized by Open Item Mana...

Explain What do you recognized by Open Item Managed Account? Ans) Open item management make sure that all items that have not yet been cleared are available in the system. Only

Explain merchandise in transit, Q. Explain Merchandise in transit? Mer...

Q. Explain Merchandise in transit? Merchandise in transit is merchandise in the hands of a shipment company on the date of a physical inventory. As stated above buyers should

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

Fringe benefit tax, Define FBT (Fringe Benefit Tax)? Ans) The tax payabl...

Define FBT (Fringe Benefit Tax)? Ans) The tax payable on a non-salary benefit given to an employee or an associate of the employee. The employer is likely to pay any FBT and may

What do the "transfer" items in the notes to the financial, What do the "tr...

What do the "transfer" items in the notes to the financial statements relate to? (in the capital assets section; Plant, property & equipment and Intangible assets

Weighted-average under periodic inventory procedure, Weighted-average under...

Weighted-average under periodic inventory procedure the weighted-average method of inventory costing is a income of costing ending inventory using a weighted-average unit cost. Com

Complicated type of business, Q. Complicated type of business? Your stu...

Q. Complicated type of business? Your study of accounting began with service companies as instance because they are the least complicated type of business. You are at present r

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