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Why was the after tax salvage value of packaging equipment which is 350,000 added to terminal cash flow instead of deducted?
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- Fully depreciated equipment costing $60,000 was discarded, with no salvage value. What effect would this have on the statement of cash flows?What is depreciation and amortization? What's the difference? It is an accounting concept that has an indirect impact on cash flow as it is deductible for tax purposes and lowers the overall amount of taxes paid for that period. Therefore, it does impact or lower cash outflows for taxes. That is called the tax shield of depreciation and amortization. Over the course of my career, companies have increased their percentage of intangible property that must be amortized. Now, it is very common where companies will have little property, plant and equipment, but lots of intangible property. Why?(d) If the old machine is sold for $5,000 now instead of $2,500, what would be the amount of the gains tax?(e) If the old machine had been depreciated by 175% DB and then by a switch to SL depreciation, what would be the current book value?(f) If the old machine were not replaced by the new one and has been depreciated by the 175% DB method, when would be the time to switch from DB to SL depreciation'?
- 10.Landscaping costs can be deducted in the determination of net business income, even if they involve items that would normally be considered capital assets True or False? 11. For the hobby farmer, deductible farming losses for a year are restricted to $2,500, plus one-half of the next $30,000. True or False?After preparing a preliminary version of its financial statements, a company found that it made a mistake in computing straight-line depreciation on the books. The company needed to reduce Depreciation Expense on its books by $100,000. Which of the following would be increased by this change? (check all that apply) Deferred Tax Assets Deferred Tax Liabilities Income Tax Payable Income Tax Expense Cash flow from OperationsA company is deciding whether to purchase a new machine or not, which among the following is not a relevant cash flow to this decision. a. Depreciation expense b. Additional sales generated c. Tax allowance arising d. Purchase price
- An asset group is being evaluated for an impairment loss. The following financial information is available for the asset group: Carrying Value=100,000,000 Sum of the undiscounted cash flows= 95,000,000 Fair value= 80,000,000 Carrying Value= $100,000,000 What is the value of the impairment loss?9. The federal government allows an income tax deduction for the decrease in value of certain capital assets such as automobiles, equipment and buildings. There are usually two different ways to calculate the depreciation: Fixed Amount Depreciation, where you deduct a fixed amount for the expected life of an asset, and Fixed Percentage Depreciation, where you deduct a fixed percentage for the expected life of an asset. Your company just bought a truck for $54,250. Assume it would last 10 years. (a) Draw one graph showing the truck value with the two methods of depreciation: the fixed amount depreciation with $5000 per year and the fixed percentage de- preciation with 15% per year. What do you discover from the graph? (b) At approximately what time would the truck has the same residual value. (c) At what percentage of depreciation the truck would have the same residual value at the end of 10th year. (d) If you own this company and you predict the company's income would increase…For each statement in parts a to d, give a short answer or indicate True orFalse. a. Which of the following is a cash flow: (1) depreciation, (2) loan interest paid, and/or (3) income tax. b. We know that depreciation law has changed dramatically since 1950; however, tax law has not changed. (T or F). c. Depreciation method affects taxes owed. (T or F). d. In an alternative evaluation, the inclusion of taxes will change the amount of the measures of merit (e.g., PW or AW), but will not change which alternative is selected as most desirable. (T or F).
- a piece of machinery cost $500.tax depreciation to date has amounted to $200 and depreciation charged in the financial statements to date is $100 the rate of tax is 30% ? what is the deferred tax liability in relation to this asset?In Able Company’s efforts to estimate a value for Baker Company's goodwill, Able is estimating Baker Company's expected future earnings. Able is using Baker's past earnings to project the future earnings. Which of the following items should be eliminated from Baker's past earnings in order to project future earnings? Extraordinary items Amortization expense for identifiable intangibles a. Yes Nob. Yes Yesc. No Yesd. No NoA flood damaged a building and contents. The receipts from insurance companies totaled $603000, which was $211050 less than the book values. The tax rate is 35%.On the statement of cash flows (indirect method), the flood loss should be shown as an inflow from investing activities of $137183. not be shown. be shown as an addition to net income of $137183. be shown as an addition to net income of $211050.