Question

The Idaho Corporation earned $23,458,933 before interest and taxes for the year ended December 31, 2016....

The Idaho Corporation earned $23,458,933 before interest and taxes for the year ended December 31, 2016. If the interest expense was $1,645,123, calculate the tax obligation for the year using a rate of 35%. Also, what is the acronym for earnings before interest and taxes?

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Answer #1

Eaning Before Interest and Tax = $23,458,933 (Given)

Interest = $1,645,123 (Given)

Earning Before Interest and Tax(EBIT) = $23,458,933

Less: Interest =$1,645,123

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Earning After Interest But Before Tax =$21,813,810

Ta obligation for the year will be 35% of Earning after Interest but before tax i.e. 35% of $21,813,810

Tax obligation for the year = 35 * 21,813,810

100

Tax obligation for the year = $7,634,833.5

The acronym for Earnings Before Interest and Taxes is EBIT.

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