It is Jan 1. The Rumpel Felt Company purchased a felt press last year at a cost

Question

It is Jan 1. The Rumpel Felt Company purchased a felt press last year at a cost of$ 6,000. The machine had an expected life of 3 years at the time of purchase. The machine was depreciated using MACRS with a 5-year recovery period. (MACRS depreciation rates are shown in the table The division manager reports that, for $ 11,000(including installation), a new felt press can be bought. The new felt press will expand sales, because the new fashion is for smoother felt. The old machine's current market value is $ 1,100. Taxes are 40 %. What is the net salvage value of the old press if Rumpel replaces it today?

The net salvage value of the old press is? (Round to the nearest whole dollar.)

Explanation / Answer

Cost of Felt 6000 Accumulated Deprciation 1800 Sales Value 1100 Book Value 4200 Loss -3100 Tax Credit 40% 1240 Net Salvage Value (1240+1100) 2340

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.