At the beginning of the year 1, Down Under Company raises $60 million of equity and uses the proceeds to buy a fixed asset. Operating profits before depreciation (all received in cash) and dividends for the company are expected to be $40 million in year 1, $50 million in year 2, and $60 million in year 3, ath which point the company terminates. The firsms pays no taxes. Assuming stright line depreciation to zero (of 20 million per year) the firm's profits thus equal $20 in year 1, $30 million in year 2 and $40 milion in year 3. If the cost of equity is 6%, the value of the firms equity is: Use the Abnormal Earnings Valuation Method Hint: Book Value per year is affected by the 20 million every year

On April 1, 2024, Titan Corporation purchases office equipment for $50,000. For tax reporting, the company uses MACRS and classifies the equipment as 5-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus depreciation. For financial reporting, the company uses straight-line depreciation. Assume the equipment has no residual value.Required: Calculate annual depreciation for the five-year life of the equipment according to MACRS. The company uses the half-year convention for tax reporting purposes.Calculate annual depreciation for the five-year life of the equipment according to straight-line depreciation. The company uses partial-year depreciation based on the number of months the asset is in service for financial reporting purposes. In which year(s) is tax depreciation greater than financial reporting depreciation?

Alternative A has an initial cost of $-130,000, an annual cash-flow before taxes of $60,000, and a depreciable life of 3 years. Alternative B has an initial cost of $-95,000, an annual cash-flow before taxes of $20,000, and a depreciable life of 5 years. The company considering the alternatives is in the 35% tax bracket and assumes straight line depreciation with an after-tax minimum acceptable rate of return (MARR) of 8% per year. A salvage value of zero is used when depreciation is calculated; however, system B can be sold after 5 years for an estimated 6% of its first cost. System A has no anticipated salvage value. Determine which is more economical using an annual worth (AW) analysis. The annual worth analysis for system A is determined to be $3655.47 The annual worth analysis for system B is determined to be $ System A is selected.

North Ltd. purchased a building in 20X5 for $1,200,000. Straight-line depreciation was used, with a useful life of 40 years and a residual value of $200,000. A full year of depreciation was charged in 20X5. In 2008, the company decided to switch depreciation methods to declining balance, using a rate of 10%. The tax rate is 30%. Required: 1. Assume this is a change in estimate, and calculate 20X8 depreciation expense. Depreciation expense $112,500 2. Assume this is a change in policy, and calculate 20X8 depreciation expense and the cumulative effect of the change on 20X8 opening retained earnings. Depreciation expense $ 240,000

Depreciation expense is 2.4% of the gross beginning balance of property, plant and equipment (PPE). As of December 31, 2021, the gross balance of PPE is P3,980,000. For January 2022, P500,000 new PPE will be acquired. It is the policy of the company that PPE acquired in the first half of the year will be depreciated for one full year. (Assume that PPE, net at the end of 2021 is #3,123,090.) How much is the PPE, net and Accumulated Depreciation - PPE on December 31, 2022? P3,875,670.00; P684,350.00 P3,675,870.00; P864,530.00 P3,575,670.00; P984,550.00 P3,515,570.00; P964,430.00

Eleven years ago, Lynn, Incorporated purchased a warehouse for $315,000. This year,the corporation sold the warehouse to Firm D for $80,000 cash and D’s assumption ofa $225,000 mortgage. Through date of sale, Lynn deducted $92,300 straight-linedepreciation on the warehouse.Requiredc. How would your answers change if Lynn was a noncorporate business?

At the end of its financial year, Tanner Co had the following non-current assets: Land and buildings at cost $10.4 million Land and buildings: accumulated depreciation $0.12 million Tanner Co decided to revalue its land and buildings at the year-end to $15 million. What will be the value of the revaluation surplus if the revaluation is accounted for? %24

On June 30, Pronghorn Corp discontinued its operations in Mexico. During the year, the operating income was $270,000 before taxes. On September 1, Pronghorn disposed of the Mexico facility at a pretax loss of $670,000. The applicable tax rate is 30%. Show the discontinued operations section of Pronghorn’s income statement. PRONGHORN CORPPartial Income Statement select an opening section name                                                                enter an income statement item                                                              $enter a dollar amount enter an income statement item                                                              $enter a dollar amount     $enter a total dollar amount

See the explanation below to work the problem. XYZ Company, a 'for-profit' business, had revenues of $12 million in 2022. Expenses other than depreciation totaled 75 percent of revenues. XYZ Company, must pay taxes at a rate of 40 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Depreciation originally was $1.5 million; however, a change in the depreciation schedule (still within GAAP) has now made the depreciation expense DOUBLE. Based on this change in depreciation expense, what would XYZ's net income now be? Select one or more: a. so b. $3,000,000 c. $1,500,000 Od. Not enough information to tell

Bayelsa Corp. had the following transactions in the current year: Short term capital gain Short term capital loss Long term capital gain Long term capital loss If Bayelsa has taxable income of $70,000 before considering the capital transactions, what is Bayelsa's net capital loss that cannot be deducted in the current year? O SO $12,000 -$3,000 $5,000 -$16,000 O $19,000 net capital loss O $11,000 net capital loss O $2,000 net capital loss