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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.
Prepare the Adjusting Journal Entries The ledger of Casper Consulting at January 31, 2011 includes the following selected accounts: Casper's accountant is inexperienced, an
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Astra Company sells financial calculators and offers instruction on their use. During its first year it expects to sell 3000 calculators at $30 each and offer 5000 hours of instruc
difference between credit and debit
differenciate between a cash book and a ledger
Posting closing entries When closing entries are entered in the General Journal, they must appear on the next line after Adjusting Entries. The words "Closing Entries" must be
Q. Show Accumulated depreciation account with example? Micro Train credits the depreciation amount to an accumulated depreciation account which is a contra asset rather than di
Under both GAAP and tax depreciation, an asset cannot be depreciation until it has been
Credit what comes in. Debit what goes out.
Q. Explain about Conservatism? Conservatism The Conservatism means being prudent or cautious and making sure that assets and net income are not overstated. Such overstatements
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