Homework Answers
Written down value after 2 years = Cost - Depreciation for 2 years
= 1,000,000(100-20-32)% = $480,000
Sale price = $600,000
Gain on sale = $120,000
Taxes = 120,000*40% = $48,000
Hence, the answer is
The company would have to pay $48000 in taxes.
Add Answer to:
St. John's Paper has purchased equipment that has a depreciable cost of $1 million. The equipment...
Company XYZ has just purchased a new piece of equipment for $71.2 thousand (depreciable basis). The...
Company XYZ has just purchased a new piece of equipment for $71.2 thousand (depreciable basis). The company plans to depreciate the equipment according to the MACRS schedule listed below. MACRS Schedule: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 20% 32% 19% 12% 11% 6% What is the ending book value of the equipment at the end of year 4? Enter you answer as a number with no decimal places and no commas or dollar sign....
A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS...
A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS depreciation schedule as a 7-year property. The operating income in year 2 was $200,000 and the expenses were $87,000. If the company is in the 40% income tax bracket, determine the after-tax cash flow in year 2 The income tax in year 2 is equal to __________________.
On June 1, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable...
On June 1, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours, which ends on December 31. Using straight-line depreciation, calculate depreciation expense for the final (partial) year of service. $12,500 $30,000 $17,500 $40,000
Fox Films is considering some new equipment whose data are shown below. The equipment has a...
Fox Films is considering some new equipment whose data are shown below. The equipment has a 3-year tax life and would be depreciated by the MACRS method using the following rates (.3333,.4445,.1481,.0741). The equipment would have a pre-tax salvage value at the end of Year 3 shown below when the project would be closed down. Also, some new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is...
22. Assume a company purchases a depreciable asset for $1 million, and that the asset has an eight-year estimated l...
22. Assume a company purchases a depreciable asset for $1 million, and that the asset has an eight-year estimated life and a zero salvage value. How much more cash will the owner of the asset have at the end of the second year if the owner uses double-declining-balance depreciation rather than straight line for tax accounting, assuming the company is profitable and pays income taxes at a 40 percent rate?
1. Your firm purchased equipment costing $600,000 1 year ago. The firm also incurred shipping costs...
1. Your firm purchased equipment costing $600,000 1 year ago. The firm also incurred shipping costs of $18,000 and installation costs of $2,000. The IRS allows this category of equipment to be depreciated over 4 years. The equipment is expected to sell for $40,000 today. What is the book value of the asset at the time of the sale? 2. A piece of equipment was originally purchased 5 years ago for $400,000 and is now being sold for $320,000. Yearly...
ian Co. paid $720,000, in cash, for a piece of equipment three years ago.This equipment is...
ian Co. paid $720,000, in cash, for a piece of equipment three years ago.This equipment is 7-year MACRS property for tax purposes. The company no longer uses this equipment in its current operations and has received an offer of $475,000 from a firm that would like to purchase it. Tian Co. is debating whether to sell the equipment or to expand its operations such that the equipment can be used. However, Tian Co. is worried that the expansion will hurt...
Markov Manufacturing recently spent $ 10.8 million to purchase some equipment used in the manufacture of...
Markov Manufacturing recently spent $ 10.8 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 21 %. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method...
Markov Manufacturing recently spent $11.5 million to purchase some equipment used in the manufacture of disk...
Markov Manufacturing recently spent $11.5 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 21%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the...
Markov Manufacturing recently spent $13.5 million to purchase some equipment used in the manufacture of disk...
Markov Manufacturing recently spent $13.5 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 21%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the...
22. Assume a company purchases a depreciable asset for $1 million, and that the asset has an eight-year estimated life and a zero salvage value. How much more cash will the owner of the asset have at the end of the second year if the owner uses double-declining-balance depreciation rather than straight line for tax accounting, assuming the company is profitable and pays income taxes at a 40 percent rate?
Markov Manufacturing recently spent $11.5 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 21%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the...
Markov Manufacturing recently spent $13.5 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 21%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the...
Most questions answered within 3 hours.
-
1-Write an algorithm to get two numbers from the user (as
inputs) and calculate the sum...
asked 40 minutes ago -
Define white-collar crime. What is the difference between
offender and offense-based definitions of white-collar crime? What...
asked 1 hour ago -
Consider a reaction which is 1st order with respect to A and 1st
order with respect...
asked 1 hour ago -
c++
The length of the hypotenuse of a right-angled triangle is the
square root of the...
asked 1 hour ago -
When a metal rod is heated, not only its resistance but also its
length and cross‐sectional...
asked 1 hour ago -
write a c++ program that computes the L^1 - Norm of a given
vector (L^1 norm...
asked 1 hour ago -
A manufacturer of banana chips would like to know whether its
bag filling machine works correctly...
asked 1 hour ago -
Complete the chapter case, "Turnover Analysis".
Chapter Case
Turnover Analysis
You recently completed your company’s new...
asked 1 hour ago -
What is the pH of solutions having the following H3O+
concentrations? Identify each as acidic, basic,...
asked 2 hours ago -
How does over-voltage of the diode usually occur?
asked 2 hours ago -
If you step on a dirty nail, your doctor will recommend you
update your Tetanus vaccination....
asked 2 hours ago -
Suppose that decreases in the price of milk lead to decrease s
in the retail prices...
asked 2 hours ago