Question

Western Pacific Company has the following revenues and costs, excluding depreciation and capital expenditures, for the years shown below. The company purchased new office fixtures on March 10, 2016 for $180,000. The office fixtures were put into service on November 23, 2016 and remain in service today. Assume the office fixtures use accelerated depreciation and are the company’s only depreciable assets.

	2016	2017	2018
Revenue	1,200,000	1,500,000	1,800,000
Costs	436,000	474,000	508,000

1A. Office fixtures are a type of _____ property and have a depreciable life of ______ years.

1B. Calculate Western Pacific Company’s net cash flow for year 2016. Use the corporate tax schedule for 2016 to calculate federal corporate income taxes.

1C. Calculate the amount of taxes Union Pacific Railroad paid in year 2017. Use the corporate tax schedule for 2016 to calculate federal corporate income taxes.

Answer 1