Calculate the after tax revenue or after tax cost for each of the preceding Tran

Question

Calculate the after tax revenue or after tax cost for each of the preceding Transactions. Impact of Income Taxes Barnett Corporation anticipates net operating income (before tax) of $1.200.000 this year. The company is considering signing an equipment lease that would result in a $175,000 deductible expense this year The company's tax rate is 35 percent Required What are the tax expense and net income after taxes for the anticipated net income without the lease of the equipment? What are the tax expense and net income after taxes if the equipment n leased?

Explanation / Answer

A.

Anticipated Net Income Without the lease of the equipment

Tax Expenses = 1,200,000*35% = 420000

Net Income after taxes = 1,200,000 - 420000 = 780,000

B.

If the equipment is leased

Tax Expenses = (1,200,000-175000)*35% = 358,750

Net Income after taxes = 1,200,000 -175000- 358750 = 666,250

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