Daly Publishing Corporation recently purchased a truck for $33,000. Under MACRS, the first year’s depreciation was...
Daly Publishing Corporation recently purchased a truck for $33,000. Under MACRS, the first year’s depreciation was $6,600. The truck driver’s salary in the first year of operation was $45,600. The company’s tax rate is 30 percent.
Required:
-
1-a. Calculate the after-tax cash outflow for the acquisition cost and the salary expense.
-
1-b. Calculate the reduced cash outflow for taxes in the first year due to the depreciation.
Complete this question by entering your answers in the tabs below.
- Req 1A
- Req 1B
Calculate the after-tax cash outflow for the acquisition cost and the salary expense.
Calculate the reduced cash outflow for taxes in the first year due to the depreciation.
|
1-b. Calculate the reduced cash outflow for taxes in the first year due to the depreciation
|
Homework Answers
1-a)
After-tax cash outflow for the acquisition cost = Acquisition cost
= $33,000
After-tax cash outflow for the salary expense = Salary expense x (1 - Tax rate)
= 45,600 x (1 - 0.3)
= 45,600 x 0.7
= $31,920
|
1-b.
Reduced cash outflow for taxes in the first year due to the depreciation = Depreciation x Tax rate
= 6,600 x 30%
= $1,980
|
Kindly comment if you need further assistance. Thanks
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