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A company has just acquired a firm with revenues of 1.2 million, cost of goods sold...

A company has just acquired a firm with revenues of 1.2 million, cost of goods sold of 630,000, salaries and wages of 240,000, interest expense of 12,000 and tax depreciation of 82,000. What is the income tax on the revenue generated from this new acquisition?

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Answer #1
Only expenditure which are treated as "Revenue expenditure" are
allowable in the computation of total income under Income Tax Allowance.
So, the capital expenditure like depreciation are non-compete expenditure.
Thus, the income tax at corporate, as per Tax Cuts and Jobs Act of 2017, is flat
at 21%, so the income tax on the revenue generated from the new acquisition
is = (1.2m - 0.63m -0.24m - 0.012m)*21% = 0.06678m*1000000 = 66780
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