it\'s two questions, in economy engineering A company purchases $6,000,000 of la
ID: 1115319 • Letter: I
Question
it's two questions, in economy engineering
A company purchases $6,000,000 of land that can be depreciated over a 39 year period using straight line depreciation. Although the land will have some value at the end of 39 years, the company intends to depreciate the entire value since the land will not be sold. The company has an annual net income of $550,000. The tax rate is 30%. Calculate the annual after tax net income with and without depreciation. Since this is straight line, the calculations only need to be done once for each case. A company has $980,000 of depreciable equipment. The annual net income is $610,000. Compute the annual after tax net income using the MACRS GDS method with a 5 year recovery period. This has to be done for every yearExplanation / Answer
Ans 1. Land of $6000000 depriciated on straight line method for 39years. Depriciatopn cost every year is
6000000/39= 153849
Profits =$550000
Net profits before Depriciation =.7 of 550000= $385000
Net profits after depriciation= 70%*(550000-153846) = $396154
Ans2.
Year Profits Equipment value Depriciation rate Depriciation Amount Net Profit (Profit- Dep) 0 610000 980000 0.2 196000 414000 1 610000 0.32 313600 296400 2 610000 0.192 188160 421840 3 610000 0.1152 112896 497104 4 610000 0.1152 112896 497104 5 610000 0.0576 56448 553552Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.