Assume that today is December 31, 2015. Mike Mulligan Excavation Inc. has one Ca
ID: 2788635 • Letter: A
Question
Assume that today is December 31, 2015. Mike Mulligan Excavation Inc. has one Caterpillar 345DL Hydraulic Excavator. It was purchased in 2014 for $300,000. The excavator is classified as a 10-year property. (MACRS depreciation rates are shown in the table.) Selected financial values for 2015 are shown in the table, below Assume a corporate tax rate of 35%. How much tax is owed in 2015 if it is a regular year of operations? (Assume that the interest expense is zero.) Selected Financial Values 2015 Mike Mulligan Excavations Inc. Data Table Sales Cost of Goods Sold S, G & A $2,463,000 $1,032,000 $818,300 ACRS Depreciation Rates The tax owed is $. (Round to the nearest dollar.) Yean Year T.Year 10-Year 20.00% 32.00% 19.20% 11 .52% 11 .52% 14.29% 24.49% 17.49% 12.49% 8.93% 10.00% 18.00% 14.40% 11 .52% 9.22%Explanation / Answer
Depreciation = 300,000 * 10% = 30,000
Tax = 582,700 * 35% = 203,945
Sales 2,463,000 Cost of Goods Sold 1,032,000 SG&A 818,300 Depreciation 30,000 Taxable Income 582,700 Tax @ 35% 203,945 Net Income 378,755