ABC, Inc purchased some new machinery three years ago for $270,743. Today, it is selling this machinery for $40,214. What is the After-tax Salvage Value of the new machinery? Assume that the tax rate is 29%. The MACRS allowance percentages are as follows, starting with Year 1: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.
|b||Less: net book value||77,974|
|c=a-b||Gain/(loss) on disposal||-37,760|
|d= c*29%||tax benefit@ 29%||-10,950|
|e= c-d||After tax salvage value||-26,810|
|Net book value|
|cost of asset||2,70,743|
|Less: accumulated depreciation||1,92,769|
|Net book value||77,974|
|Depreciation for 3 years:|
|1st year rate||20%|
|2nd year rate||32%|
|3rd year rate||19.2%|
|Total depreciation taken||71.2%|
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