(Tax effects of asset sale) Southwest Industrial purchased a material conveyor sys¬ tem 3 years ago. Now, the company is going to sell the system and acquire more advanced technology. Data relating to this equipment follow:

a. How much depreciation has been claimed on the conveyor system for tax purposes? For financial accounting purposes?

b. What will be the after-tax cash flow from the sale of this asset?

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Market value now $15,000 Original cost 24,000 Book value now, for tax purposes 8,000 Book value now, for financial accounting purposes 15,000 Corporate tax rate 40%