Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 4, Problem 6AP
a.
To determine
Determine the after-tax cash from the contract in the given situation.
b.
To determine
Determine the after-tax cash from the contract in the given situation.
c.
To determine
Determine the after-tax cash from the contract in the given situation.
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Company G, which has a 30 percent marginal tax rate, owns a controlling interest in Company J, which has a 12 percent marginal tax rate. Both companies perform engineering services. Company G is negotiating a contract to provide services for a client. Upon satisfactory completion of the services, the client will pay $100,000 cash.
Required:
Compute the after-tax cash from the contract assuming that Company G is the party to the contract and provides the services to the client.
Compute the after-tax cash from the contract assuming that Company J is the party to the contract and provides the services to the client.
Compute the after-tax cash flow for Company G from the contract assuming that Company J is the party to the contract, but Company G actually provides the services to the client.
Zentric Garage Inc. enters into a contract to provide services totaling $78,000. The contract includes a potential performance bonus
based on when Zentric Garage completes the services. Zentric Garage estimates the following scenarios for completion.
(Click the icon to view the scenarios.)
Determine the bonus using the most-likely-amount approach.
Determine the bonus using the most-likely-amount approach under scenario 1.
The bonus for this contract using the most-likely-amount approach under scenario 1 is $
Determine the bonus using the most-likely-amount approach under scenario 2.
The bonus for this contract using the most-likely-amount approach under scenario 2 is $
Determine the bonus using the most-likely-amount approach under scenario 3.
The bonus for this contract using the most-likely-amount approach under scenario 3 is $
Ente
Scenarios
Complete within
3 days
5 days
8 days
Probability
Bonus Scenario 1 Scenario 2
80%
47%
15%
38%
5%
15%
$ 13,000
$ 8,000
$ 3,500
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George Co. enters into a contract to build an apartment for Jungle Co. For a fixed fee of P20,000,000. At contract inception, George Co. assesses its performance obligations in the contract and concludes that it has a single performance obligation that is satisfied over time. George Co. determines that the measure of progress that best depicts its performance in the contract is input method based on costs incurred. George estimates that the total contract costs would amount to P16,000.000 over the construction period. George incurs contract costs of P2,000,000 during the year.
How much revenue is recognized for the year?
Chapter 4 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 4 - Prob. 1QPDCh. 4 - Mrs. K is about to begin a new business activity...Ch. 4 - Prob. 3QPDCh. 4 - On the basis of the discussion in this chapter and...Ch. 4 - Prob. 5QPDCh. 4 - Why do income shifts and deduction shifts usually...Ch. 4 - Prob. 7QPDCh. 4 - Prob. 8QPDCh. 4 - Prob. 9QPDCh. 4 - Prob. 10QPD
Ch. 4 - Identify the reasons why managers should evaluate...Ch. 4 - Prob. 12QPDCh. 4 - Prob. 13QPDCh. 4 - Prob. 14QPDCh. 4 - Using the 2019 corporate tax rate: a. What are the...Ch. 4 - Refer to the individual rate schedules in Appendix...Ch. 4 - Refer to the individual rate schedules in Appendix...Ch. 4 - Ms. JK recently made a gift to her 19-year-old...Ch. 4 - Firm A has a 21 percent marginal tax rate, and...Ch. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Firm M and Firm N are related parties. For the...Ch. 4 - Company K has a 30 percent marginal tax rate and...Ch. 4 - Firm H has the opportunity to engage in a...Ch. 4 - What is the effect on the NPV of the restructured...Ch. 4 - French Corporation wishes to hire Leslie as a...Ch. 4 - Corporation R signed a contract to undertake a...Ch. 4 - Prob. 14APCh. 4 - Lardo Inc. plans to build a new manufacturing...Ch. 4 - Prob. 16APCh. 4 - Prob. 17APCh. 4 - Prob. 18APCh. 4 - Prob. 19APCh. 4 - Prob. 20APCh. 4 - Refer to the facts in the preceding problem. At...Ch. 4 - For each of the following scenarios, indicate...Ch. 4 - Assume that Congress amends the tax law to provide...Ch. 4 - Firm L has 500,000 to invest and is considering...Ch. 4 - Prob. 1IRPCh. 4 - Mr. and Mrs. K own rental property that generates...Ch. 4 - Prob. 3IRPCh. 4 - Prob. 4IRPCh. 4 - Prob. 5IRPCh. 4 - Prob. 6IRPCh. 4 - Prob. 7IRPCh. 4 - Firm HR is about to implement an aggressive...Ch. 4 - Prob. 1TPCCh. 4 - Prob. 2TPCCh. 4 - Prob. 3TPCCh. 4 - Ms. Z has decided to invest 75,000 in state bonds....
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