Ask Question
7 March, 16:51

An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. The asset has an acquisition cost of $9,400,000 and will be sold for $2,840,000 at the end of the project. If the tax rate is 23 percent, what is the aftertax salvage value of the asset?

+5
Answers (1)
  1. 7 March, 18:50
    0
    The after-tax salvage value of the asset is $125,073.

    Explanation:

    Use following schedule to calculate accumulated depreciation after 4 years

    Year MACRS rates Depreciation Accumulated Depreciation

    1 20% $188,000 $188,000

    2 32% $300,800 $488,800

    3 19.20% $180,480 $669,280

    4 11.52% $108,288 $777,568

    Salvage Value after 4 years = Acquisition cost - Accumulated Depreciation after 4 years = $940,000 - $777,568 = $162,432

    After Tax Salvage value = $162,432 x (1 - 23%) = $162,432 x (1 - 0.23) = $162,432 x 0.77 = $125,073
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. The asset has an acquisition cost of $9,400,000 and ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers