Ask Question
BusinessBusiness
10 November, 19:06

Rocky Top, Inc., purchased some seven-year MACRS welding equipment six years ago at a cost of $73,000. Today, the company is selling this equipment for $25,000. The tax rate is 33 percent. What is the aftertax cash flow from this sale? The MACRS allowance percentages are as follows, commencing with Year 1: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.

+1
Answers (1)
  1. 10 November, 21:30
    0
    The aftertax cash flow from the sale is $ 19,976.

    Explanation:

    In the case given in the problem cash flow comprises of two things one is cash from sale and the second is cash payment or saving as result of this sale.

    In order to calculate tax saving/payment we first have to calculate tax base of the asset in order to determing profit/loss on disposal.

    Profit/loss on disposal Calculation

    Profit / (Loss) = Sale Price - Tax base = 25,000 - 73,000 (100-MACRS (86.61) %)

    Profit / (Loss) = 15,225.3

    As profit so Tax outflow = 15,225.3 * 33% = $ 5,024

    SO

    After Tax Cash flow from sale = 25,000 - 5,024 = $ 19,976
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Rocky Top, Inc., purchased some seven-year MACRS welding equipment six years ago at a cost of $73,000. Today, the company is selling this ...” 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
You Might be Interested in
In commercial food manufacturing, hydrogenation is used to
Answers (1)
Jane, Joseph and John are supporting their father who lives in a separate apartment. Their contribution towards his support is 10%, 35% and 55%, respectively. In a multiple support agreement, who would be entitled to claim the father as a dependent?
Answers (1)
At the end of the current year, using the aging of receivable method, management estimated that $28,500 of the accounts receivable balance would be uncollectible.
Answers (1)
Office Palace, Inc., leased an all-in-one printer to a new customer, Ashley, on December 27, 2018. The printer was to rent for $600 per month for a period of 36 months beginning January 1, 2019.
Answers (1)
During the first fifty years of its existence, Congress raised money primarily through a. income taxes. b. export taxes. c. import taxes. d. none of the above.
Answers (1)
New Questions in Business
Abc company is hesitant about entering ukraine, because the country has been experiencing social unrest in recent years. Based on this information, what type of risk is abc company trying to avoid?
Answers (1)
When the price of flowers increased from $5.00 to $5.70, the quantity demanded of chocolate increased from 5,550 to 6,150. What is the estimated cross-price elasticity of demand for chocolate? Round your answer to the nearest hundredth.
Answers (1)
Assume the following information for Kingbird Corp. Accounts receivable (beginning balance) $139,000 Allowance for doubtful accounts (beginning balance) 11,370 Net credit sales 944,000 Collections 908,000 Write-offs of accounts receivable 5,300
Answers (1)
Jamal works at the recreation center 15 hours a week during the school year he earns $ 8.75 an hour in a typical month he works 63 hours calculate his monthly Taxes
Answers (1)
Lap Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 80,000 units, 100% complete with respect to materials and 25% complete with respect to
Answers (1)
Home » Business » Rocky Top, Inc., purchased some seven-year MACRS welding equipment six years ago at a cost of $73,000. Today, the company is selling this equipment for $25,000. The tax rate is 33 percent.
Sign Up Forgot Password?