FINANCE Chapter 9 Homework Ques non 4 6) Save & ExE Subnt 4. 1pa 0 00 points Pro
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FINANCE Chapter 9 Homework Ques non 4 6) Save & ExE Subnt 4. 1pa 0 00 points Problem 9 6 Calculating Salvage Value ILO 2] that costs $966,00 and is depreciated straight-line to zero over its ten yesr tax ito The asset is to be used in a seven year profect, at thie end of the prcyect the asset can be sod for $136,803 is the atertax cash fiow trom the sae of ths esset? (Do not round intermedisate calculations and round your answer to the nearest whiole (Do not round intermediate calculations a If the 'elevant tax rate s 35 percent, wha1rs the anertar cash flow 1rom ne sale of this asset Aftertax salvage valuse Problem 9-6 Calculating Salvage Value LO 2 Learning Obyectve 09-02 A cash fiows 122017Explanation / Answer
Accumulated depreciation at the end of Year 7 = $ 966,000 / 10 x 7 = $ 676,200.
Book value at the time of sale = $ 966,000 - $ 676,200 = $ 289,800
Gain ( loss) on salvage = $ 136,800 - $ 289,800 = $ (153,000)
Tax effect of the gain = $ ( 153,000) x 35 % = $ ( 53,550)
After tax salvage value = $ 136,800 - $ ( 53,550) = $ 190,350.
After tax salvage value $ 190,350Related Questions
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