QUESTION 1 Acme Industries had sales last year of 12,000,000 They had expenses o

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QUESTION 1 Acme Industries had sales last year of 12,000,000 They had expenses of 9,755,000 They purchase several pieces of new equipment during the year that: Cost $3,000,000 to purchase Had $1,100,000 related costs to set up install etc. Has a salvage value of 750,000 in 5 years Using straight line depreciation what are the taxable earnings. 1,789,000 1,850,000 1,910,000 1,987,655 QUESTION 2 Acme Industries had sales last year of 12,000,000 They had expenses of 9,755,000 They purchase several pieces of new equipment during the year that: Cost $3,000,000 to purchase Had $1,100,000 related costs to set up install etc. Has a salvage value of 750,000 in 5 years Using straight line depreciation calculate the amount of tax owed 325,000 517,563 O 649,400 789,456 QUESTION 3

Explanation / Answer

Accoridngly, 113,900+(1910000-335000)*34%=113,900+1575000*34%=113,900+535500=649,400

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All amounts are In $ Q-1-Option 3 Sales 1,20,00,000.00 Expenses     -97,55,000.00 Depreciation       -3,35,000.00 Taxable earnings      19,10,000.00 Depreciation Purchase value      30,00,000.00 Add:Related setup costs      11,00,000.00 Total cost incurred to put the asset to use      41,00,000.00 Less:Salvage value       -7,50,000.00 Value to be depreciated      33,50,000.00 Useful life (Years)                       5.00 Depreciation/year=33,50,000/5         6,70,000.00 Eligible depreciation=670000/2         3,35,000.00 Q-2-Option 3 Taxable earnings (From Q-1)      19,10,000.00 Tax owed Tax on taxable income above 335,000 and lower than 10,000,000 is 113,900+34% of excess income over 335,000 but below10,000,000

Accoridngly, 113,900+(1910000-335000)*34%=113,900+1575000*34%=113,900+535500=649,400

Please give thumps up if you like the solution

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