Cost recovery.
Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $94,000. It is classified in the property class category of a single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS,
, was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 40%tax rate) if
a. the sales price was $30,000?
b. the sales price was $29,365.60?
c. the sales price was $21,000?
Homework Answers
rate positively ..
| First we have to compute the book value at the end of 4th year | |||
| Remaining book value = | 29,365.60 | ||
| 94000*(1-14.29%-24.49%-17.49%-12.49%) | |||
| Book value = | 29,365.60 | ||
| Ans a | sales price is = | $ 30,000.00 | |
| book value = | $ 29,365.60 | ||
| Gain on sales= | $ 634.40 | ||
| Tax on gain =@40% | $ 253.76 | ||
| After tax cash flow from sale= | $ 29,746.24 | ||
| ans = | $ 29,746.24 | ||
| Ans b | sales price is = | $ 29,365.60 | |
| book value = | $ 29,365.60 | ||
| Gain on sales= | $ - | ||
| Tax on gain = | $ - | ||
| After tax cash flow from sale= | $ 29,365.60 | ||
| ans = | $ 29,365.60 | ||
| Ans c | sales price is = | $ 21,000.00 | |
| book value = | $ 29,365.60 | ||
| Gain on sales= | $ (8,365.60) | ||
| Tax on gain = | $ (3,346.24) | ||
| After tax cash flow from sale= | $ 24,346.24 | ||
| ans = | $ 24,346.24 |
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Cost recovery.
Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer
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$82,000. It is classified in the property class category of a
single – purpose agriculture and horticultural structure. then the
company sold the tree trimmer after four years of service. If the
seven your life and MARCS, was used for the depreciation schedule,
what is the after-tax cash flow from the sale of the trimmer (use a
35% tax rate) if
a. the sales price was $36,000?
b. the...
P10-10 (similar to) Question Help Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree...
P10-10 (similar to) Question Help Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $93,000. It is classified in the properly class category of a single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS, B. was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 40% tax rate) it a. the sales...
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Richardses' Tree Farm, Inc. has just purchased a new aerial
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using aseven-year life (for the property class category of a
single-purpose agricultural and horticultural structure from Table
10.3) for both straight-line depreciation and MACRS,
Use the half-year convention for both methods. Compare the
depreciation schedules before and after taxes using a 40% tax
rate.
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methods?...
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Richardes' Tree Farm, Inc. purchased a new aerial tree trimmer for
$82,000. It is classified in the property class category of a
single – purpose agriculture and horticultural structure. then the
company sold the tree trimmer after four years of service. If the
seven your life and MARCS, was used for the depreciation schedule,
what is the after-tax cash flow from the sale of the trimmer (use a
35% tax rate) if
a. the sales price was $36,000?
b. the...
P10-10 (similar to) Question Help Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $93,000. It is classified in the properly class category of a single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS, B. was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 40% tax rate) it a. the sales...
10.8 Depreciation expense. (10 Part Answer)
Richardses' Tree Farm, Inc. has just purchased a new aerial
tree trimmer for $89,000. Calculate the depreciation schedule
using aseven-year life (for the property class category of a
single-purpose agricultural and horticultural structure from Table
10.3) for both straight-line depreciation and MACRS,
Use the half-year convention for both methods. Compare the
depreciation schedules before and after taxes using a 40% tax
rate.
What do you notice about the difference between these two
methods?...
5. Depreciation expense. Richardses' Tree Farm, Inc. has just purchased a new aerial tree trimmer for $85,000. Calculate the depreciation schedule using a seven-year life (for the property class category of a single-purpose agricultural and horticultural structure from Table 10.3) for both straight-line depreciation and MACRS,!. Use the half-year convention for both methods. Compare the depreciation schedules before and after taxes using a 40% tax rate. What do you notice about the difference between these two methods? Using a seven-year...
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