Fill in the missing numbers for the following income statement. (Do not round intermediate calculations.) $ Sales Costs Depreciation EBIT Taxes (23%) Net income $ $ 662,000 423,600 100,400 138,000 31,740 106,260 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
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- Which of the following is used when computing for the accounting rate of return (ARR)? a. Income before depreciation but after taxes. b. Income after depreciation and taxes. c. Income before depreciation and taxes d. Income after depreciation but before taxes.Which of the following statements is false? A For tax purposes, companies can use the MACRS depreciation method. B When you change a depreciation estimate, such as salvage value, you need to make an adjustment to retained earnings. C If the expected future cash flow is less than the carrying amount, the asset is considered impaired. D If an impairment loss is recorded, depreciation must be recalculated since the book value changed.Which of the following statements is false? A For tax purposes, companies can use the MACRS depreciation method. B When you change a depreciation estimate, such as salvage value, you need to make an adjustment to retained earnings. C If the expected future cash flow is less than the carrying amount, the asset is considered impaired. D If an impairment loss is recorded, depreciation must be recalculated since the book value changed. The answer A is wrong
- Calculate the EBIT which should be used for the EV / EBIT multiple given the information below: Net revenues Cost of sales Gross Profit Selling, general and administrative expenses Amortization expense Restructuring costs Acquisition-related costs Asset impairment charges Gain on sales of assets Operating income Interest expense, net Loss on early extinguishment of debt Other expense, net Income (loss) before taxes (Benefit) provision for income taxes Net income (loss) Select one: 1,394,8 1,444.4 1,474.3 S 1,419.6 5,248.1 1,746.0 3,502.1 2,027.8 During fiscal 2050, the company sold assets relating to the Cutey brand for a total disposal price of $29.2. The Company allocated $4.2 of goodwill to the brand as part of the sale. The Company recorded a gain of $24.8 which has been reflected in Gain on sales of assets in the Consolidated Statement of Operations for the fiscal year ended June 30, 2050. 79.5 86.9 174.0 5.5 (24.8) 1,153.2 81.9 3.1 30.4 1,037.8 (40.4) 1,078.2A company wishes to report the highest earnings possibleaccording to GAAP. Therefore, when calculating depreciation for financial reporting purposes,a. It will follow the MACRS depreciation rates prescribedby the IRS.b. It will estimate the shortest lives possible for itsassets.c. It will estimate the longest lives possible for its assets.d. It will estimate lower residual values for its assets.Depreciation is needed only for computing income taxes. True or false?
- 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).Assume an income statement with the following classifications: a. Revenuesb. Cost of goods soldc. Distribution expensesd.General & administrative expensese. Other revenues and expensesf. Income tax on income from continuing operationsg. Gain from disposal of discontinued operationsh. Income tax on gain from discontinued operationsi. None of the above Indicate by letter how each of the following should be classified: Income tax effect of loss on sale of plant Income tax on gain on sale of short-term investment in securities Interest expense Interest revenue Loss on sale of patent Dividend revenue from investment Sales returns Services soldEBITDA can be calculated using following formula |depreciation EBITDA + %3D EBIT + ammortisation EAT interest tax
- Which of the following statements are true? Select one or more: a. MACRS must be used for book purposes if it is used for tax purposes. b. Managers often prefer the straight-line method because it helps to smooth earnings. c. Units of production method is not appropriate for natural resources. d. Double-declining balance recognizes more depreciation expense early in an asset's life. PreviousSave AnswersNextQuestion: (a) What is a Capital Recovery Amount Factor (b) Write a detailed note on Minimum Attractive Rate of Return. (c) "Land" is not considered as a depreciable property. WHY? (d) Differentiate between income tax and sales tax. Explain both of these types with the help of examples. ww aNWhich of these statements about depreciation is true? a. MACRS depreciation incorporates only declining balance depreciation in itscomputations for all assets.b. Straight line depreciation is actually not straight at all, but is based on anexponential decay function.c. For twenty-first century assets in the U.S., MACRS depreciation and taxdepreciation have the same meaning.d. Gains tax is paid on any revenue that exceeds the year's depreciation allowance.