4.2. The following information relates to Machine Productive at 31 December 2020: Historic Carrying amount Fair value less cost to sell Value in Use Tax Base Remaining useful life R 400 000 340 000 320 000 300 000 4 years One year later the fair value less cost to sell was R320 000 and the value in use was R380 000. Machine Productive is depreciated on a straight-line basis. Assume that the tax rate is 28%, and a capital allowance of R100 000 was granted in 2021 REQUIRED: Prepare the journal entries relating to the reversal f the impairment loss in the 2021 year of assessment

4.2. The following information relates to Machine Productive at 31 December 2020: Historic Carrying amount Fair value less cost to sell Value in Use Tax Base Remaining useful life R 400 000 340 000 320 000 300 000 4 years One year later the fair value less cost to sell was R320 000 and the value in use was R380 000. Machine Productive is depreciated on a straight-line basis. Assume that the tax rate is 28%, and a capital allowance of R100 000 was granted in 2021 REQUIRED: Prepare the journal entries relating to the reversal f the impairment loss in the 2021 year of assessment

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 6MCQ: Refer to the information for Cox Inc. above. What amount would Cox record as depreciation expense...

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3) Below table shows the calculations for an after-tax analysis of a machine purchase alternative. Depreciation Income Тахes EOY ВТСР Тахable АТCF Deduction Income 20,000 16,000 16,000 16,000 - 20,000 9,500 9,500 9,500 - 6,500 - 6,500 - 6,500 - 6,500 – 6,500 -7,500 1 3,000 3,000 3,000 13,000 13,000 13,000 13,000 2 16,000 16,000 9,500 9,500 4 3,000 3,000 5 13,000 6 18,000 3,000 15,000 10,500 a) Find answers to the below questions i. What are the cost basis (price) and "annual revenues less expenses"? What is the terminal market value (or salvage value)? What is the income tax rate? ii. iii. iv. What is the method used for depreciation deduction? What is the book value at the end of useful life? V. b) Calculate the equivalent present worth (PW) and the equivalent annual worth (AW) at an after-tax MARR of 9%.
3) ( Below table shows the calculations for an after-tax analysis of a machine purchase alternative. EOY ВТСР Depreciation Deduction Тахable Income АТCF Income Таxes - 20,000 16,000 16,000 16,000 16,000 16,000 18,000 3,000 3,000 3,000 3,000 3,000 3,000 13,000 13,000 13,000 13,000 13,000 15,000 - 6,500 - 6,500 - 6,500 - 6,500 - 6,500 - 7,500 - 20,000 9,500 9,500 9,500 9,500 9,500 1 3 4 6. 10,500 a) Find answers to the below questions What are the cost basis (price) and "annual revenues less expenses"? What is the terminal market value (or salvage value)? What is the income tax rate? i. ii. iii. iv. What is the method used for depreciation deduction? What is the book value at the end of useful life? V. b) Calculate the equivalent present worth (PW) and the equivalent annual worth (AW) at an after-tax MARR of 11%.
cost and subsequently measured, using either the cost model 7. The resulting revaluation surplus, gross of tax, is P80K. 9. The P80K revaluation gain is recognized in profit or loss. 1. PAS 16 defines depreciation as “the decrease in the value of ar An item of PPE with a carrying amount of P120K is revalued to its 8. All the other items within the class of PPE to which the Disposal costs of P10K were incurred. The loss on the disposal 10. A PPE with a carrying amount of P200K is sold for P180K. 2. According to PAS 16, items of PPE are initially measured at PROBLEM 1: TRUE OR FALSE i PAS 16 defines depreciation as "the decrease in the value 2. According to PAS 16, items of PPE are initially measured cost and subsequently measured, using either the cost modal asset." or the fair value model. 3. An entity acquires an asset for P120K. The asset is estimated to have a useful life of 10 years and a residual value of P20K. The straight line depreciation rate based on depreciable amount is…
Pertinent information for two alternatives A and B is shown below. If i=10% / year and the effective income tax rate is 35%, answer the following true/false questions. Alt. A Alt.B Basis, $ Gross Income (GI), $ Operating Expense (OE), $ Salvage Value, $ MARCS Depreciation Method O True 150,000 100,000 30,000 O False 225,,000 100,000 10,000 The depreciation charge at the end of year 7 for Alt. A is zero. 15,000 22,500 ADS-6: Years Recovery GDS: 5-Years Recovery Period Period
Asset impairment charge is non-cash charge that is deductible for taxes. It is considered one-time in nature. · Income tax rate 25% (this is the same rate for income from all locations in this analysis). Create Income statement to determine if worthy of a purchase?
Fill in the missing numbers for the following income statement. (Do not round intermediate calculations.) Sales Costs Depreciation EBIT Taxes (21%) Net income $ 657,800 418,700 98,300 a. Calculate the OCF. (Do not round intermediate calculations.) b. What is the depreciation tax shield? (Do not round intermediate calculations.) a. OCF b. Depreciation tax shield
a. Fill in the following table assuming MACRS depreciation rates (10 points) Year 0 1 2 3 4 5 6 Pretax income MACRS Taxable Depreciation income Tax owed After tax income Inflation adjustment factor Real after tax income b. If MARR = 18%, should you purchase this system based on your real after-tax income? Why or why not? (5 points)
If net income before tax is 60000 OMR, tax is 2000 OMR, interest is 1500 OMR, depreciation is 1500 OMR and amortization is 1000 OMR, the EBITDA is: Select one: O a. 64000 OMR O b. Correct answer is not available O c. 62000 OMR O d. 66000 OMR
If EBITDA is 60000 OMR, depreciation is 2000 OMR, amortization is 1000 OMR, interest is 1500 OMR, tax is 1500 OMR, the net income after tax is Answer:
CTT Limited has an asset which cost $300 with related accumulated depreciation of $100. The accumulated depreciation for tax purposes is $180 and the company tax rate is 30%. The tax base of this asset is: Question 3Answer a. $120 b. $20 c. $80 d. $220
a. Fill in the missing numbers in the following income statement: Note: Do not round intermediate calculations and round your answers to the nearest whole number, e.g. 32. Sales Costs Depreciation EBIT Taxes (25%) Net income $ b. OCF c. Depreciation tax shield 643,700 384,300 136,500 b. What is the OCF? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32. c. What is the depreciation tax shield? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.
7. Germs Co. determined the following information for the 24,000,000 Revaluation model - Cost approach purpose of revaluing its building: Historical cost Accumulated depreciation 7,680,000 8 years Actual life 32,000,000 On 5 years P4, 20 years Replacement cost Effective life Remaining economic life Depreciation method SLM ife 30% th Income tax rate Requirements: a. Compute for the revaluation surplus, net of tax. b. Provide the entry to record the revaluation surplus using () Proportional method and (2) Elimination method. c. Determine the revised Re annual depreciation after tre revaluation.