1. Initial cash flow at t=0: Purchase: -$700‚000 Shipping and installation: -$100‚000 Depreciable basis = $800‚000 Old machine after taxes = $120‚000 - ($120‚000-$80‚000)(.40) = $104‚000 Initial Cash flow = -$800‚000 + $104‚000 = -$696‚000 Depreciation: Year 1: $800‚000 * .3333 = $266‚640 Year 2: $800‚000 * .4445 = $355‚600 Year 3: $800‚000 * .1481 = $118‚480 Year 4: $800‚000 * .0741 = $59‚280 Yearly revenue change: Decrease operating expenses of $90‚000 Incremental net cash flow
Premium Income statement Cash Generally Accepted Accounting Principles
How are the income statement and statement of cash flows used to make business decisions? The income statement reflects the company’s financial performance by showing how much money was generated (revenue)‚ how much was spent (expenses)‚ and the difference (profit) between the two over a period of time. It is divided into the operating and non-operating sections. It can also tell how much money shareholders would receive if the company were to distribute all of its net earnings. The cash flow
Premium Income statement Cash flow Time
5 – BALANCE SHEET AND INCOME STATEMENT -Identify the different financial statements (BS*‚ IS‚ Statement of Stockholders’ Equity‚ and related notes) -Identify the different components of the BS (Assets: current and long term; Liabilities: current and long term; stockholders’ equity: preferred stock‚ common stock‚ PIC‚ treasury stock) -Identify the different component of the IS (Gross profit‚ earnings before interest and taxes‚ interest expense‚ income tax expense‚ income from continuing operations
Premium Balance sheet Depreciation Generally Accepted Accounting Principles
‘Why are adjusting entries necessary? Surely they cause too much delay in preparing financial statements‚ and the financial effect of any entries made is immaterial in the long run.’ Respond to this criticism. ii. The owner of a business reviews the income statement prepared by you and asks‚ “Why do you report a profit of only $30 000 when cash collections of $100 000 were received and cash payments for the period totalled only $50 000 for expenses?” How would you respond to the owner’s question? iii
Premium Income statement Generally Accepted Accounting Principles 1966
introduction the SUPERMARKET SUPERMARKET: a large self-service shop selling foods and household goods Provision stores and grocers Supermarkets These two categories will be considered Hypermarkets Examples of local supermarkets NTUC FairPrice Cold Storage Shop n Save Giant Sheng Siong an OLIGOPOLY Oligopolies have: A few dominant firms High barriers to entry Homogeneous/Differentiated products Mutual interdependence analysis and evaluation analysis and evaluation Is the supermarket
Premium Brand Hypermarket Supermarket
included in the assessable income of Nick. b) As per the principles of Ordinary Income compensation for loss of income is also an income therefore‚ it will form part of assessable income. Nick must include $50000 as his assessable income for the year. c) The amount has been received by Nick towards operation and rehabilitation expenses and therefore‚ they are not included under income from ordinary concepts. The receipt of $8000 will not be included in the assessable income of Nick.
Premium Taxation Taxation in the United States Tax
- dividends (eligible) - dividends (ineligible) - other income - SBD income - ABI over $500‚000 - investment income 28% 33% 45% 15% 25% 44 2/3% (38 + 6 2/3) Incorporation of Proprietorship The primary benefit of incorporation is the ability to use the small business deduction on $500‚000 of annual business income. Based on the existing profit the annual tax saving will be: Current taxes: .45 x $120‚000 After incorporation: Corporate income Less salary to Court Corporate tax (15%) Total tax: Corporation
Premium Tax Corporation Taxation
Accounting for Income Tax Under IFRS‚ Income Tax is taxes based on taxable profits‚ and taxes that are payable by a subsidiary‚ associate or joint venture on distribution to investors. U.S GAAP defines income tax as all domestic federal‚ state and local taxes based on income‚ including foreign income taxes from an entity’s operations that are consolidated‚ combined or accounted for under the equity method‚ both foreign and domestic. In IFRS‚ the guidance about accounting for income taxes is in
Premium Taxation Balance sheet Tax
There are different ways in how two income statements are prepared. For example: the income statement (also known as P&L) of a merchandising company consists of Revenue‚ Expenses (related to the sales volume through the Cost of Goods Sold (COGS) and General & Administrative Expense (G&SA)‚ which all result in Net Income. The income statement of a Service company consists of Service Revenue minus any Expenses related to that service‚ which results in Net Income. Another way to look at it is that
Premium Generally Accepted Accounting Principles Balance sheet Inventory
Income statement: In the case of sole proprietary and partnership concerns there are no prescribed forms of the income statement and balance sheet. Their preparation is also desirable but not compulsory. However‚ they are generally prepared. In the case of trading concern‚ a trading account and in the case of a manufacturing concern‚ a manufacturing account and a trading account can also be prepared. In such a case‚ the account heading is mentioned as follows: Manufacturing/trading and profit and
Premium Balance sheet Asset Generally Accepted Accounting Principles