Answer:
Parke Company
The amount of interest expense should be included in Parke's 20X4 income statement is:
= $30,600.
Explanation:
a) Data and Calculations:
3-year Non-interest bearing note payable = $360,000
Imputed interest rate for this type of loan = 12%
Present value of the loan = $255,000
Interest expense as of December 31, 20X4 = $30,600 ($255,000 * 12%)
b) The interest expense is based on the present value of the loan and not on the future value of the note payable. Therefore, the interest expense for each of the three years will not be the same amount but will continue to increase as the present value changes from one year to the next.
All of the given questions are part of the critical questions that
entrepreneurs need to ask themselves. Being an entrepreneur needs a lot
of thinking and planning and these questions should be taken into
account. Running a business would include the location fit for the type
of business you have, the structure of your business, how you recruit
workers and the incentives you give them, and most importantly, your
capital.
Answer:
$4.8 million reduction
Explanation:
Given that
Cost to the company = $12 million
Expected to generate revenues next year = $280 million
Corporate tax rate = 40%
Based on the above information, the effect would be
The cost to the company is treated as an expense and therefore it is deducted from the revenue. Moreover, there is a reduction of $4.8 million i.e come from
= $12 million × 40%
= $4.8 million
This amount is shown reduction in taxes
