FACC 300 Chapter 7 Exam Questions With 100% Correct Answers 2024, Exams of Advanced Education

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FACC 300 Chapter 7 Exam Questions

With 100% Correct Answers 2024

before tax cash flow - Correct Answer-operating profits - capital expenditure after tax cash flow - Correct Answer-operating profits - income taxes - capital expenditure net income + depreciation + ONTA - capital expenditure CCA - Correct Answer-Canadian Cost Allowance - depreciation allowance in Cad tax system net salvage value - Correct Answer-sales price - dismantling costs and transport costs depreciation recapture - Correct Answer-net salvage value > undepreciated balance, but does not exceed purchase price, the difference is taxed, UCC - Correct Answer-undepreciated capital cost = undepreciated balance which is the amount with CCA claims

loss on disposal - Correct Answer-net salvage value < undepreciated balance, then the difference is allowed as deduction for loss half year rule - Correct Answer-CCA rate applicable in the year of the acquisition of the asset is half the normal annual rate - applies only when asset becomes available for use in year of aquisition asset pools - Correct Answer-assets depreciated by DBD method, grouped together, depreciated and taxed together negative pool balance - Correct Answer-you have made a profit off of selling an asset SLD assets - Correct Answer-depreciated individually revenues - operating expenses < 0 - Correct Answer-operating loss, loss can be carried forward Cad system loss-carry - Correct Answer-losses can be carried forward for max 20 years, and carried backwards max 3 years

tax refund - Correct Answer-carry losses backwards, most beneficial CCA in loss-carry forward/backwards provision - Correct Answer-create artificial loss/expense that qualify for the provision (CCA/depreciation is not a cash-expense) revenue - OE - CCA < 0 => loss in general depreciation cannot create losses so... - Correct Answer-use lowest depreciation rates first then use higher depreciation rates capital gain - Correct Answer-the sale of a depreciated and non depreciated asset that is sold for more than its og purchase price, taxed 50% capital loss - Correct Answer-the sale of a non- depreciated asset that is sold for less than its og purchase price, only used against capital gain, can be brought forward(indefinitely)/backward(3 years) taxes paid on revenue - Correct Answer-tax liability = BTRev*(t)

ATRev - Correct Answer-BTRev*(1-t) = BTRev - tax liability operating expenses on revenue - Correct Answer- deductible from revenue to determine taxable income tax saving - Correct Answer-tax saving = BTOC * t , government absorbs part of the increase in OE through a reduction in tax payments ATOC - Correct Answer-ATOC = BTOC - tax saving = BTOC(I-t) (1-t) - Correct Answer-operating tax factor ATCE - Correct Answer-ATCE = BTCE (CTF) = CE - total discounted tax savings total discounted tax savings - Correct Answer-= sum of (DCj * t)/(1+i)^j total tax saving - Correct Answer-= CEt

Tax adjustment on SV (GENERAL) net SV > UCC, taxes paid? ATSV? - Correct Answer-taxes paid = (SV - UCC)t, ATSV = BTSV-taxes paid Tax adjustment on SV (GENERAL) net SV < UCC, tax saving? ATSV? - Correct Answer-tax saving = (SV-UC C)t , ATSV = BTSV +tax saving With DBD method, if assets are purchased during year of disposal and if they exceed disposal, how to calculate ATSV? vs if this is not known? (CANADA) - Correct Answer-use CTF with half year rule, if not known do not use HYR Tax adjustment (CANADA) to salvage value DBD, ATSV? - Correct Answer-ATSV= SV(CTF) Tax adjustment (CANADA) to salvage value SLD, ATSV? - Correct Answer-ATSV = SV - (SV-UCC)(1-CTF) with SLD method, if net SV > UCC - Correct Answer-difference is taxed, recaptured with SLD method, if net SV < UCC - Correct Answer-difference is written-off, loss on disposal

working capital - Correct Answer-not tax-deductible, non- depreciated item, amount incurred for operating expenses before receipt of revenue in the last preproduction year, put in safe at beginning add at the end non-integrated company - Correct Answer-no other source of income within company or within tax jurisdiction, depreciation is not, loss carried forward, no tax-saving integrated company - Correct Answer-other sources of income within company and across tax jurisdiction, negative taxes = tax- saving sunk cost - Correct Answer-paying for something extra that is not needed or will be used, ex: paying for extra parking spot that won't be used opportunity cost - Correct Answer-making money off of a sunk cost, ie renting the parking spot that is not being used