1. The MacCauley Company has sales of $200 million and total expenses (excluding depreciation) of $130 million. Straight-line depreciation on the companyâ??s assets is $15 million, and the maximum accelerated depreciation allowed by law is $25 million. Assume that all taxable income is taxed at 40 percent. Assume also that net working capital remains constant.
a. Calculate the MacCauley Companyâ??s aft er-tax operating cash flow using both straightline and accelerated depreciation.
b. Assuming that the company uses straight-line depreciation for book purposes and accelerated depreciation for tax purposes, show the income statement reported to the stockholders. What is the aft er-tax operating cash flow under these circumstances?© BrainMass Inc. brainmass.com October 10, 2019, 1:16 am ad1c9bdddf
The depreciation for taxable income is examined. The response addresses the queries posted in a well explained excel file.