Assumptions & Model Output Tax Rate: Initial CapEx Spending at the End of Year 0: Annual Depreciation %: Income Statement: Revenue: Cost of Goods Sold (COGS): Gross Profit: 25.0% $ 300 33.3% 33.3% 33.3% Annual Depreciation %: 66.7% 33.3% 0.0% Year 1 Book Accounting Year 2 Year 3 Income Statement: Year 1 Tax Accounting Year 2 Year 3 $ 1,000 $1,000 $ 1,000 Revenue: $ 1,000 $1,000 $ 1,000 100 100 100 900 900 900 Cost of Goods Sold (COGS): Gross Profit: 100 100 900 900 100 900 700 700 700 Operating Expenses: 700 700 700 100 100 100 Depreciation: Operating Expenses: Depreciation: Operating Income: 100 ỗ 100 100 (-) Net Interest Expense: Pre-Tax Income: 100 100 100 Operating Income: (-) Net Interest Expense: Pre-Tax Income: (-) Income Taxes: (25) (25) (25) (-) Income Taxes: Net Income: $ 75 $ སྒ 75 $ 75 Net Income: Which of the following statements is NOT true about the Deferred Income Taxes, Deferred Tax Liability, and Net PP&E over Years 1 - 3? a. Initially, Deferred Income Taxes will be negative since Tax Depreciation is higher than Book Depreciation, but they will turn positive in Year 3. b. The Deferred Tax Liability at the end of Year 1 will be $25. C. On both versions of the statements, the Net PP&E and Deferred Tax Liability will be $0 at the end of Year 3. d. Year 2 will be the only period where the Deferred Taxes are $0.

Assume that Congress recently passed a provision that will enable Barton's Rare Books (BRB) to double its depreciation expense for the upcoming year but will have no effect on its sales revenue or tax rate. Prior to the new provision, BRB's net income after taxes was forecasted to be $4 million. Which of the following best describes the impact of the new provision on BRB's financial statements versus the statements without the provision? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.   Question 10 options:   a)  Net fixed assets on the balance sheet will increase.   b)  The provision will reduce the company's free cash flow.   c)  The provision will increase the company's net income.   d)  Net fixed assets on the balance sheet will decrease.   e)  The provision will increase the company's tax…

During the year, Belyk Paving Co. had sales of $2,600,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,535,000, $465,000, and $520,000, respectively. In addition, the company had an interest expense of $245,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) (Enter your answer as directed, but do not round intermediate calculations.) Required: (a) What is Belyk's net income? (Negative amount should be indicated by a minus sign.) Net income (b) What is Belyk's operating cash flow? Operating cash flow A

2. Which of the following depreciation methods usually results in the paying of the lowest income taxes in the early years of an asset’s life a. Sum-of the year’s digits depreciation method b. Double-declining balance (200%) depreciation method c. Straight-line depreciation method d. Units-of-production depreciation method Please do not plagiarise