Copyright

Consider the following data: Before Tax revenue = $22,500, Loan Principal Payment = $5,926, Loan...

Question:

Consider the following data:

Before Tax revenue {eq}= \$22,500 {/eq}

Loan Principal Payment {eq}= \$5,926 {/eq}

Loan Interest Payment {eq}= \$2,400 {/eq}

MACRS Depreciation {eq}= \$16,665 {/eq}

What is the taxable income?

Taxable Income:

Taxable Income refers to the income on which tax is to be charged by the federal authorities. It is given as the revenues minus all the expenses allowable under the tax laws.

Answer and Explanation:

Taxable Income is computed as follows:

Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) = $22,500.00

Less: MACRS depreciation = $16,665.00

Earnings before Interest and Tax (EBIT) = $5,835.00

Less: Interest = $2,400.00

Earnings before tax (EBT) = $3,435.00

EBT is the taxable income which is $3,435.00

  • No Deduction is given for the Principle repayments of the loan.

Learn more about this topic:

Loading...
How to Calculate Corporate Taxable Financial Income

from Accounting 202: Intermediate Accounting II

Chapter 8 / Lesson 2
1.7K

Related to this Question

Explore our homework questions and answers library