Depreciation expense will be reported for tax purposes

Reference no: EM13324218

Johnson Family Care Inc. is a large ambulatory care center that provides comprehensive 24-hour primary and specialty care to a large suburban population in Pennsylvania. The center recently purchased new clinical laboratory equipment for $1.1 million and spent $22,000 to renovate a center room to accommodate the new equipment. The useful life of the equipment is estimated to be ten years, after which it can be sold for $75,000. Johnson uses a straight-line method to calculate book depreciation and pays tax at a rate of 40 percent. The equipment falls into the MACRS seven-year class.

a. What annual depreciation expense will be reported on the income statement for the center?

b. What annual depreciation expense will be reported for tax purposes?

c. Suppose Johnson sells the laboratory equipment at the end of Year 4 for $400,000. What impact would this have on the taxes paid by the center?

Reference no: EM13324218

Questions Cloud

What is the price of each bond today : What is the price of each bond today and if interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now?

What remedies do you propose if the market fails to provide : If the market for unskilled labor is highly competitive, what would a minimum wage legislation do to their level of employment? What remedies do you propose if the market fails to provide adequate income?

What must the coupon rate be on these bonds : Yield To Maturity of 6.80 percent, and a current price of $1,045. The bonds make semiannual payments. What must the coupon rate be on these bonds?

How far do you go during the whole trip : Starting from rest, you move with a constant acceleration of 2.1 m/s2 for 13.0 s and then move with an acceleration of -2.1 m/s2 for another 13.0 s. How far do you go during the whole trip

Depreciation expense will be reported for tax purposes : What annual depreciation expense will be reported on the income statement for the center and what annual depreciation expense will be reported for tax purposes?

Would a voucher system of housing subsidy for the poor : Using the tools of demand and supply analysis, illustrate the impact of rent control on the market for housing in a free market economy. Would a voucher system of housing subsidy for the poor or low income households work better or worse than rent co..

Compute how far did they skid : A 1000 kg aircraft going 25 m/s collides with a 1500 kg aircraft that is parked. how far did they skid

Estimate the diameter of the tower based on bottom operating : Estimate the diameter of the tower, based on bottom operating conditions. Assume that the density and viscosity of the bottom liquid are the same as tose for pure water. Make other appropriate assumptions as needed.

What is the greatest height reached by the ball : A ball is thrown vertically upwards with an initial velocity of 21.84 m/s. Neglecting air resistance, how long is the ball in the air? What is the greatest height reached by the ball

User Account

All Pages