Book value and taxes on sale of assets?? Troy Industries purchased a new machine

Question

Book value and taxes on sale of assets??

Troy Industries purchased a new machine 5 ?year(s) ago for $82,000. It is being depreciated under MACRS with a? 5-year recovery period using the schedule:

Assume 40% ordinary and capital gains tax rates.

a. What is the book value of the? machine?

the remaining book value is: $

round to the nearest dollar

b. Calculate the? firm's tax liability if it sold the machine for each of the following? amounts:

$98,400

ROUND TO THE NEAREST DOLLAR

REPEAT FOR:

$57,400

$4,100

$2,900

SALE PRICE CAPITAL GAIN TAX ON CAPITAL GAIN DEPRECIATION RECOVERY TAX ON RECOVERY TOTAL TAX $98,400 More Info Koundea Depreciation Percentages Dy Recovery rear using MACRS TO First Four Property Classes Percentage by recovery year 7 years 10 years 5 years 20% 32% 19% 12% 12% 5% 10% 18% 14% 12% 9% 5% 7% 6% 6% 6% 4% 100% 3 years 33% 45 15% 7% 14% 25% 18% 12% 9% 9% 9% 4% Recovery year 4 10 100% 100% Totals 100% Print Done

Explanation / Answer

Statement showing book value of mahine at end of year 5

Statement showing tax liability and related cash flows

Year Opening balance Depreciation rates Depreciation = 82000* depreciation rates Closing balance 1 82000 20% 16400 65600 2 65600 32% 26240 39360 3 39360 19.00% 15580 23780 4 23780 12.00% 9840 13940 5 13940 12.00% 9840 4100 6 4100 5.00% 4100 0

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