Question

The LGH Corp. announced that, for the period ending March 31, 2011, it had earned income after taxes worth $2,768,028.25 on revenues of $13,144,680. The company’s costs (excluding depreciation and amortization) amounted to 61 percent of sales and it had interest expenses of $392,168. What is the firm’s depreciation and amortization expense if its tax rate was 34 percent?

Please show all woks and steps

Answer 1

Income after Taxes = $2,768,028.25

Income after taxes = Income before taxes * (1-tax rate)

So, 2768028.25 = Income before taxes * (1-34%)

Income before taxes =2768028.25 / 0.66

=4193982.197

Sales or revenue = $13,144,680

cost of goods sold = 61% of 13,144,680 = 8018254.8

Interest expense = 392168

Income before taxes = Sales - Cost of goods sold - Depreciation and amortization expenses - interest

4193982.197 = 13,144,680 - 8018254.8 - Depreciation and amortization expenses - 392168

Depreciation and Amortization expenses = 4734257.2 - 4193982.197

540275.00

So, Depreciation and amortization expenses is $540,275.

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