Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 12, Problem 6BTN
Summary Introduction
Concept Introduction:
To Give:
Half page memorandum on performance and cash flow of the company.
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Scott Smith just bought a new “StreamLink” machine which will be depreciated on a straight-line basis to a book value of $73,000 at the end of its four-year life. During the first two years, the net income associated with the machine is expected to be $15,700 and $18,300, respectively. During the last two years, the net income associated with the equipment is expected to be $23,800 and $15,600, respectively. What is the average-accounting return associated with the “StreamLink” machine? Please note that Scott paid $184,000 for the machine.
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Year Annual Operating Cash Flow Salvage Value
0
1
2
3
4
5
-$22,500
6,250
6,250
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6,250
6,250
$22,500
17,500
14,000
11,000
5,000
0
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Warren Company plans to open a new repair service center for one of its electronic products. The center requires an investment in depreciable assets costing $432,000. The assets will be depreciated on a straight-line basis, over four years, and have no expected salvage value. The annual income statement for the center is given below.
Revenues
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Less: Cash operating expenses
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Depreciation
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Less: Income taxes (@40%)
45,600
Net income
$68,400
Required:
1. Using the income approach, calculate the after-tax cash flows.$fill in the blank 1
2. Using the decomposition approach, calculate the after-tax cash flows for each item of the income statement and show that the total is the same as the income approach. Enter cash expenses as negative amounts and noncash expenses as positive amounts.
Revenue (after tax)
$fill in the blank
Cash expenses (after tax)
fill in the blank
Depreciation tax savings
fill in…
Chapter 12 Solutions
Loose Leaf for Financial Accounting: Information for Decisions
Ch. 12 - What is the reporting purpose of the statement of...Ch. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Describe the direct method of reporting cash flows...Ch. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 13DQCh. 12 - Prob. 14DQCh. 12 - Prob. 15DQCh. 12 - Prob. 1QSCh. 12 - Prob. 2QSCh. 12 - Prob. 3QSCh. 12 - Prob. 4QSCh. 12 - Prob. 5QSCh. 12 - Prob. 6QSCh. 12 - Prob. 7QSCh. 12 - Prob. 8QSCh. 12 - Prob. 9QSCh. 12 - Prob. 10QSCh. 12 - Prob. 11QSCh. 12 - Prob. 12QSCh. 12 - Prob. 13QSCh. 12 - Refer to the data in QS 12-11. How much cash is...Ch. 12 - Prob. 15QSCh. 12 - Prob. 16QSCh. 12 - Prob. 17QSCh. 12 - Prob. 18QSCh. 12 - Prob. 19QSCh. 12 - Prob. 21QSCh. 12 - The following transactions and events occurred...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 16ECh. 12 - Prob. 17ECh. 12 - Prob. 18ECh. 12 - Prob. 19ECh. 12 - Prob. 1PSACh. 12 - Prob. 2PSACh. 12 - Prob. 3PSACh. 12 - Prob. 4PSACh. 12 - Prob. 5PSACh. 12 - Golden Corp., a merchandiser, recently completed...Ch. 12 - Prob. 7PSACh. 12 - Prob. 8PSACh. 12 - Prob. 1PSBCh. 12 - Prob. 2PSBCh. 12 - Prob. 3PSBCh. 12 - Prob. 4PSBCh. 12 - Prob. 5PSBCh. 12 - Prob. 6PSBCh. 12 - Prob. 7PSBCh. 12 - Prob. 8PSBCh. 12 - Prob. 12SPCh. 12 - Prob. 1FSACh. 12 - Prob. 2FSACh. 12 - Prob. 3FSACh. 12 - Prob. 1BTNCh. 12 - Prob. 2BTNCh. 12 - Prob. 4BTNCh. 12 - Prob. 6BTN
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