From the information below please calculate the the avoided tax effect on the sale of a Noise cancelling device using the formula Avoided Tax effect: -[(WDV Salvage Value) x tc] where tc is 30%
4. Due to the significant size of the "Pacific Dream", Sydney Ports requires that the "Pacific Dream" be immediately fitted with a special thruster to manoeuvre within tight spaces. The current market value of a special thruster is $5 million, Roger expects the special thruster to have a useful life of 20 years. 5. The special thruster generates an unpleasant sound when in operation. Royal Oceania will immediately install a noise cancelling device to reduce the effects of the unpleasant sound generated by the special thruster. According to the Royal Oceania Cruises accounting books, an idle noise cancelling device (which has been written off for tax purposes) is currently stored in their North Sydney premises and is compatible with the "Pacific Dream" cruise ship. The Global Maritime Agency website shows that the current market value for the noise cancelling device is $750,000 and forecasts indicate that the noise cancelling device will be worthless 10 years from today. Roger informs you that the noise cancelling device was previously purchased for $2 million. 19. The Australian Tax Office (ATO) has recently released updates to its tax rulings. Under taxation ruling 2000/18 "Passenger ships", the effective life of cruise ships like the "Pacific Dream" qualify for an effective life of 30 years. According to the ATO, the special thruster has an effective life of 6 years and the noise cancelling device has a depreciation rate of 20% per year. 4. Due to the significant size of the "Pacific Dream", Sydney Ports requires that the "Pacific Dream" be immediately fitted with a special thruster to manoeuvre within tight spaces. The current market value of a special thruster is $5 million, Roger expects the special thruster to have a useful life of 20 years. 5. The special thruster generates an unpleasant sound when in operation. Royal Oceania will immediately install a noise cancelling device to reduce the effects of the unpleasant sound generated by the special thruster. According to the Royal Oceania Cruises accounting books, an idle noise cancelling device (which has been written off for tax purposes) is currently stored in their North Sydney premises and is compatible with the "Pacific Dream" cruise ship. The Global Maritime Agency website shows that the current market value for the noise cancelling device is $750,000 and forecasts indicate that the noise cancelling device will be worthless 10 years from today. Roger informs you that the noise cancelling device was previously purchased for $2 million. 19. The Australian Tax Office (ATO) has recently released updates to its tax rulings. Under taxation ruling 2000/18 "Passenger ships", the effective life of cruise ships like the "Pacific Dream" qualify for an effective life of 30 years. According to the ATO, the special thruster has an effective life of 6 years and the noise cancelling device has a depreciation rate of 20% per year
