Answer and Explanation:
Revenue $160,000
Rental Costs $30,000
Variable Costs $50,000
Depreciation $10,000
Profit before tax $70,000
Tax(35%) $24,500
Net Income $45,500
Operating cash flow
a) Dollars in minus dollars out
Revenue ? rental costs ? variable costs ? taxes = $160000 -$30000-$50000-$24,500 = $55,500
b) Adjusted accounting profits
Operating cash flow = Net income + depreciation = $45,500 + $10,000 = $55,500
c) Add back depreciation tax shield
Operating cash flow = [(Revenue ? rental costs ? variable costs) × (1 ? 0.35)] + (depreciation × 0.35)]
= ($160,000-$30000-$50,000)*0.65 + $10,000*0.35 = $55,500
Yes, the above approaches result in the same value for cash flow
Answer:
The correct answer is option C.
Explanation:
There is a recession in the economy. It has lead to a reduction in the construction of new houses. This has affected Lance's business adversely. Also, the banks are going to increase the interest rates for the credit or reduce the credit limit.
An expansion in the economy will be helpful for Lance's business. If feds reduce interest rates, the cost of borrowing will decrease. This will boost investment in the economy. With the increase in investment production and income increase as well. This will create more demand in the economy.
Answer:
D. The income statement because it recognizes revenues at the time of sale (whether payment has been received or not) and recognizes expenses when they are incurred.
Explanation:
The income statement in accordance to the accrual basis and matching concept recognizes revenues at the time of sale (whether payment has been received or not) and recognizes expenses when they are incurred.
The business exists for a profit motive and it is the income statement that reveals whether or not the company is doing so, on a monthly, quarterly and annual basis.
Again, the listing of all categories of expenses on the income statement makes it possible to focus attention on which cost has to be brought under control to improve profitability.
Answer:
Darin will have a $10000 and also he will be able to deduct $5,000.
Explanation:
Solution
Recall that:
Darin tax basis =$7000
Risk amount = $5000
Loss incurred = 40,000 (current year)
Ownership =25%
Now
With regards to his share the loss will be 25% of $40000, that is $10000 and he will be able to deduct only $5000 because of his at-risk amount is this and as per Sec. 465.
Or
40000 * 25% = $10000
He will deduct $5000 from $10000 only
Hence $10,000 of the loss will flow-through to Darin, and he will be able to deduct $5,000.
Answer:
Expand.
Explanation:
A firm investing to create one product because that investment could lead to the development of other products in the future is an example of the option to <u>Expand</u>. When a company produces one product to make many more products from the same in the future, that means the company is expanding.
