Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Troy Industries purchased a new machine 4 year(s) ago for $82,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule.

Troy Industries purchased a new machine 4 year(s) ago for $82,000.

It is being depreciated under MACRS with a 5-year recovery period using the schedule.

Assume 40% ordinary and capital gains tax rates.

a. What is the book value of the machine?

b. Calculate the firm's tax liability if it sold the machine for each of the following

amounts: $98,400; $57,400; $13,940; and $9,800.

a. The remaining book value is

$ . (Round to the nearest dollar.)

Rounded Depreciation Percentages by Recovery Year Using MACRS for

First Four Property Classes

Percentage by recovery year*

Recovery year

3 years

5 years

7 years

10 years

1

33%

20%

14%

10%

2

45%

32%

25%

18%

3

15%

19%

18%

14%

4

7%

12%

12%

12%

5

12%

9%

9%

6

5%

9%

8%

7

9%

7%

8

4%

6%

9

6%

10

6%

11

4%

Totals

100%

100%

100%

100%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Institutions Management And Investments

Authors: Herbert Mayo

10th International Edition

1111820643, 9781111820640

More Books

Students also viewed these Finance questions