An asset with an accounting book value of $50,000 was sold
for cash on January 1, 2006.
Assume two selling prices: $65,000 and $30,000. For each selling price, prepare
a tabulation of the accounting gain or loss, the effect on income taxes, and
the total after-tax effect on cash. Assume the asset qualifies for Class 8, 20 percent
declining balance and assume a required rate of return of 10 percent. The
applicable income tax rate is 30 percent.