Mushali Services is now at the end of the final year of a project. The equipment
ID: 2708224 • Letter: M
Question
Mushali Services is now at the end of the final year of a project. The equipment originally cost $22,500, of which 75% has been depreciated. The firm can sell the used equipment today for $6,000, and its tax rate is 40%. What is the equipment Mushali Services is now at the end of the final year of a project. The equipment originally cost $22,500, of which 75% has been depreciated. The firm can sell the used equipment today for $6,000, and its tax rate is 40%. What is the equipment Mushali Services is now at the end of the final year of a project. The equipment originally cost $22,500, of which 75% has been depreciated. The firm can sell the used equipment today for $6,000, and its tax rate is 40%. What is the equipmentExplanation / Answer
correct answer is b. $5,850
% depreciated on equip. 75%
Tax rate 40%
Equipment cost $22,500
? Accumulated deprec. 16,875
Current book value of equipment $ 5,625
Market value of equipment 6,000
Gain (or loss): Market value ? Book value $ 375
Taxes paid on gain (?) or credited (+) on loss -150
AT salvage value = market value +/? taxes $ 5,850
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