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AACE International CCP Exam - Topic 3 Question 38 Discussion
Topic #: 3
An agricultural corporation that paid 53% in income tax wanted to build a grain elevator designed to last twenty-five (25) years at a cost of $80,000 with no salvage value. Annual income generated would be $22,500 and annual expenditures were to be $12,000.
Answer the question using a straight line depreciation and a 10% interest rate.
The following question requires your selection of CCC/CCE Scenario 17 (4.2.50.1.1) from the right side of your split screen, using the drop down menu, to reference during your response/choice of responses.
Annual estimated tax would be:
To calculate the taxable income:
Annual income: $22,500
Annual expenditures: $12,000
Depreciation: $3,200
Taxable Income: 22,50012,0003,200=7,30022,500 - 12,000 - 3,200 = 7,30022,50012,0003,200=7,300
Tax Rate: 53%
Estimated Annual Tax: 7,3000.53=3,8697,300 times 0.53 = 3,8697,3000.53=3,869
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