Question

"A consumer electronics company was formed to develop cell phones that run on or recharged by fuel cells. The company purchased a warehouse and converted it into a manufacturing plant for $7,400,000. It completed installation of assembly equipment worth $1,800,000 on December 31st. The plant began operation on January 1st. The company had a gross income of $8,500,000 for the calendar year. Manufacturing costs and all operating expenses were $2,900,000. The depreciation amounted to $417,000. What is the taxable income for this company?"

Answer 1

Calculate the taxable income as follows: Taxable income = Gross income - Operating expenses - Depreciation = $8,500,000 - $2,900,000-$417,000 = $5,183,000 Therefore, the taxable income is of $5,183,000.