Lento Inc. owned machinery with a $30,000 initial cost basis. Accumulated book depreciation with respect to the machinery was $12,000, and accumulated tax depreciation was $19,100. Lento sold the machinery for $13,000 cash. Lento’s marginal tax rate is 30 percent.
a. Compute Lento’s book gain or loss on sale.
b. Compute Lento’s tax gain or loss on sale.
c. Compute Lento’s after-tax cash flow from the sale.