Final answer:
The firm's accounting profit, calculated by subtracting total expenses from sales revenue, would be $50,000. This profit is a precursor to determining its corporate income taxes, with tax rates ranging between 34% and 35% for different income brackets.
Step-by-step explanation:
The student's question involves analyzing a company's calculation of income taxes for the year ended December 31, 2016. To determine the firm's accounting profit which factors into its taxable income, one would subtract the total expenses from the sales revenue. In the provided scenario, if a firm had sales revenue of $1 million and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, the firm's accounting profit would be calculated as follows:
Sales Revenue - (Labor + Capital + Materials) = Accounting Profit
$1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000
Therefore, the firm's accounting profit for the last year would be $50,000. This profit before tax would then be used to assess the corporate income taxes due, taking into account the corporate tax brackets that could range from 34% to 35% for different levels of income.