The term tax shield refers to the amount of income tax saved by deducting depreciation for income tax purposes. Assume that Supreme Company is considering the purchase of an asset as of January 1, 2012. The cost of the asset with a five-year life and zero residual value is $100,000. The company will use the straight-line method of depreciation.
Supreme's income for tax purposes before recording depreciation on the asset will be $50,000 per year for the next five years. The corporation is currently in the 35% tax bracket.
Required:
i. Calculate the amount of income tax that Supreme must pay each year if the asset is not purchased.
ii. Calculate the amount of income tax that Supreme must pay each year if the asset is purchased.
iii. What is the amount of the depreciation tax shield?
Answers: 3
Business, 22.06.2019 03:40
Electronics assembly inc. is a contract manufacturer that assembles consumer electronics for a number of companies. currently, the operations manager is assessing the capacity requirements as input into a bid for a job to assemble cell phones for a major global company. the company would assemble three models of cell phones in the same assembly cell. setup time between the phones is negligible. electronics assembly inc. operates two 8-hour shifts for 275 days per year. cell phone demand forecast (phones/year) processing time (minutes/phone) mars 47,000 19.8 saturn 35,000 20.7 neptune 7,500 16.2 a. calculate total capacity required by line. b. determine the total operating time available. c. calculate the total number of assembly cells. (round up your answer to the next whole number.)
Answers: 2
Business, 22.06.2019 10:50
Choose the statement that is incorrect. a. search activity occurs only in markets where there is a shortage. b. when a price is regulated and there is a shortage, search activity increases. c. the time spent looking for someone with whom to do business is called search activity. d. the opportunity cost of a good is equal to its price plus the value of the search time spent finding the good.
Answers: 3
Business, 22.06.2019 12:30
Provide an example of open-ended credit account that caroline has. caroline blue's credit report worksheet.
Answers: 1
Business, 22.06.2019 15:10
You want to have $80,000 in your savings account 11 years from now, and you’re prepared to make equal annual deposits into the account at the end of each year. if the account pays 6.30 percent interest, what amount must you deposit each year? (do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answers: 1
The term tax shield refers to the amount of income tax saved by deducting depreciation for income ta...
Geography, 28.08.2020 01:01
Mathematics, 28.08.2020 01:01
Physics, 28.08.2020 01:01
Social Studies, 28.08.2020 01:01
Computers and Technology, 28.08.2020 01:01
Mathematics, 28.08.2020 01:01
Mathematics, 28.08.2020 01:01
Chemistry, 28.08.2020 01:01