Gains and losses on disposal, Cost Accounting

When assets are replaced during the anticipated life of the project, or at the end of the anticipated life of the project, they are sold at their pre-determined scrap values. Income Tax Rate (Including Capital Gains Tax)

Income tax is applied as a single rate throughout the life of the project. (note that for assignment any profit(loss) of sale of assets is taxed in the same manner as ordinary income and not according to the Australian Capital Gains Tax provisions) As the parent corporation has sufficient profits to absorb any losses that may be incurred by the project from year to year there will be no losses to be carried forward and offset against future profits (ordinary or otherwise).  As the corporation takes immediate advantage of any tax savings that may be incurred, in the event that the annual net profit(loss) of the project results in a tax saving to the corporation, an amount equivalent to the tax saving is paid into the project account at year end.  The company DOES NOT use tax-effect accounting techniques.

Calculations for  PAYG deductions (for the company or staff) are not required. The Impact of the Gst For the purposes of this model you should ignore any GST implications.

Project Valuation Method

At the end of each year the project is valued at the Present Value of the annual operating profit (before income tax and interest) of that year, as if it were received each year for the next 5 years.

Net Present Value Rate

The required rate of return and/or discount rate used in Net Present Value Calculations is determined from time to time by the corporations financial advisers. (For the sake of simplicity assume that all the factors (including inflation) that are required to be considered in determining the NPV/Discount rate are reflected in the abovementioned rate).

Inflation Rate

The average annual inflation rate is calculated over the life of the project.

Posted Date: 3/2/2013 12:47:42 AM | Location : United States

Related Discussions:- Gains and losses on disposal, Assignment Help, Ask Question on Gains and losses on disposal, Get Answer, Expert's Help, Gains and losses on disposal Discussions

Write discussion on Gains and losses on disposal
Your posts are moderated
Related Questions
Prepare a spreadsheet of an overhead budget for the company in Problem 5 on page 216 of the textbook. You have been running a construction company out of your home with your spouse

A organization is evaluating a proposed 4-year project.  The depreciable cost will have the following: $300,000 for the equipment, $20,000 for shipping, and $30,000 for installatio

Optimise Manufacturing Cost Of late it is perceived that in order to optimise manufacturing cost, a product might be designed and financed in one country; its material /compon

Q. Given the below information, what is the dollar amount that the LIFO liquidation added to gross margin?   Number of Units Price per Unit


What do you mean by differential costing ? How it differ from marginal costing ? explain its practical application with examples?

Prod 400000 DM cost $3 DL 24 moh v 1.80 F 4.50 products 35000 DMP12000lb@$11/lb DM use10450lb DL38500HR 880500 v moh64150 FMOH152000

1. You are required to download the latest annual report published by one of the following institutions: - Adult Multicultural Education Services - Centre for Adult Education

Q. A firm uses capital and labor to produce a single output good. The production function is given by F(K, L) = K 2 L where K is the amount of capital and L is the amount of labo