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Unformatted text preview: expenses of the period in which
they were incurred. Examples: Shipping and
15 Certified Financial Controller CFC Sale or Disposal of
a Depreciable Asset
• Generally, the sale of a “capital asset”
(as defined by the IRS) generates a
capital gain (asset sells for more than
book value) or capital loss (asset sells
for less than book value).
• Often historically, capital gains income
has received more favorable US tax
treatment than operating income.
16 Certified Financial Controller CFC 8 Corporate Capital
Gains / Losses
• Currently, capital gains are taxed
at ordinary income tax rates for
corporations, or a maximum 35%.
• Capital losses are deductible
only against capital gains. 17 Certified Financial Controller CFC Calculating the
Incremental Cash Flows
Initial cash outflow the initial net cash
• Initial cash outflow – the initial net cash
• Interim incremental net cash flows –
those net cash flows occurring after the
initial cash investment but not including
the final period’s cash flow.
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- Fall '12