Ask Experts Questions for FREE Help !
Ask
    mcubed18's Avatar
    mcubed18 Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Feb 3, 2010, 02:11 PM
    How to find depreciation expense if it's not given
    I have sales of 2500, cost of goods sold 1800, interest expense 105, tax rate of 35%. Also tells me the change in retained earnings are 200 and dividends paid are 80. Its asking me to find depreciation but don't know how to get it. I know that adding the change in retained earnings and the dividends give me net income but still can't get the answer

    Thanks for any help
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
    		  
    #2

    Feb 3, 2010, 04:44 PM
    You're starting on the right track... if retained earnings increased by 200 even after a dividend payout of 80, this implies the after-tax net income was 280. So far, so good.

    With a tax rate of 35%, this means the pre-tax net income was 280 / 0.65 = X. (The pre-tax net is the result of dividing the after-tax net by (1 - t), where t is the effective tax rate.

    With X as the pre-tax net income, depreciation expense is easily determined as the deduction which creates that amount of pre-tax net income. I think you can wrap 'er up from here. Good luck!
    mcubed18's Avatar
    mcubed18 Posts: 3, Reputation: 1
    New Member
    		  
    #3

    Feb 3, 2010, 05:02 PM
    You my friend, are the man ha... Thank you so much, I got the answer right away.
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
    		  
    #4

    Feb 4, 2010, 04:31 AM
    Glad to help, M.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Accumulated Depreciation and Depreciation Expense [ 10 Answers ]

I have accumulated depreciation and depreciation expense. Do they go together on the Asset side of the balance sheet? My balance sheet is not balancing! The accumulated depreciation is subtracted from the assets on my balance sheet. If I add the depreciation expense to the assets, my balance...

Depreciation Expense and Accumulated Depreciation are classified,respectively, as: [ 3 Answers ]

Depreciation Expense and Accumulated Depreciation are classified,respectively, as: a. expense, contra asset b. asset, contra liability c. revenues, asset d. contra assest, expense I think it is A

Depreciation Expense [ 2 Answers ]

http://img.photobucket.com/albums/v682/xxkidk2xx/acct1-2.jpg http://img.photobucket.com/albums/v682/xxkidk2xx/acct2-1.jpg I've attempted this part of the problem with "?" at least a 100 times.. Can someone please explain to me what I'm doing wrong.

Depreciation Expense and Accumulated Depreciation are classified, respectively, as [ 2 Answers ]

Depreciation Expense and Accumulated Depreciation are classified, respectively, as

View more questions Search