Question

If there is a difference between the salvage and book value of an asset, there will be a tax implication to the sale.

Group of answer choices

True

False

Answer #1

TRUE

There will be a tax implication to the sale, when the salvage value is different from the book value of an asset.

Example: Book value of the asset = $100,000

Salvage value of the asset = $120,000

The tax rate is 30%

Salvage value > Book value

The company will have to pay a tax on the difference amount between the salvage value and the book value of asset

Tax amount = (120,000 - 100,000) * 0.30

Tax amount = $6,000

*Can
you please upvote? Thank You :-)*

The “tax gap” is the difference between the amount of tax the
government actually collects and the amount they could have
collected if all of the tax rules had been complied with.
Group of answer choices
True
False

I have noticed that in many exercises when there is a difference
between book value and fair market value , we calculate the
percentage of discount at first in order to calculate the
depreciation expenses
For example, let's think about a company which buys an asset
from other company
The book value of machine is 30.000 USD
The fair value (after financial expert statement) is
35.000USD
How can we calculate the depreciation expenses for 10 years (we
assume salvage value...

A company is thinking to sell an asset since it will be replaced
by a higher capacity one. The estimated sale price of the asset is
$300,000 while the asset has depreciated to the salvage value of
$500,000. If the company has the marginal tax rate of 35%, what is
the tax implication of the sale of this asset?
Round to the nearest penny. If tax liabilities, type a negative
sign in front. Do not include a dollar sign in...

A company is thinking to sell an asset since it will be replaced
by a higher capacity one. The estimated sale price of the asset is
$300,000 while the asset has depreciated to the salvage value of
$500,000. If the company has the marginal tax rate of 35%, what is
the tax implication of the sale of this asset? Round to the nearest
penny. If tax liabilities, type a negative sign in front. Do not
include a dollar sign in...

Describe the difference between market value and book value?

what is the difference between book value and fair value?

The book value of an asset is equal to its cost plus accumulated
depreciation.
True or False

Problem 10-7 Calculating Salvage Value [LO1] Consider an asset
that costs $645,000 and is depreciated straight-line to zero over
its eight-year tax life. The asset is to be used in a five-year
project; at the end of the project, the asset can be sold for
$129,000. If the relevant tax rate is 22 percent, what is the
aftertax cash flow from the sale of this asset? (Do not round
intermediate calculations.)
Aftertax salvage value= ?

The book value of an asset when using double-declining-balance
depreciation is always greater than the book value from using
straight-line depreciation, except at the beginning and the end of
the asset's useful life, when it is the same.
TRUE OR FALSE?

Computing Depreciation, Net Book Value, and Gain or Loss
on Asset Sale
Lynch Company owns and operates a delivery van that originally cost
$46,400. Lynch has recorded straight-line depreciation on the van
for four years, calculated assuming a $5,000 expected salvage value
at the end of its estimated six-year useful life. Depreciation was
last recorded at the end of the fourth year, at which time Lynch
disposes of this van.
a. Compute the net book value of the van on...

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