a depreciable asset company purchas MACRS depreciation with a 5 year class life. The depreciation schedule is: Year % Depreciation Book Value 0 $70,000 1 20 $14,000 56,000 2 32 22,400 33,600 3 19.2 13,440 20,160 4 11.52 8,064 12,096 5 11.52 8,064 4,032 6 5.76 4,032 0 If the ordinary income tax rate is 40% and the capital gain rate is 20%, determine the asset depre ited by
a depreciable asset company purchas MACRS depreciation with a 5 year class life. The depreciation schedule is: Year % Depreciation Book Value 0 $70,000 1 20 $14,000 56,000 2 32 22,400 33,600 3 19.2 13,440 20,160 4 11.52 8,064 12,096 5 11.52 8,064 4,032 6 5.76 4,032 0 If the ordinary income tax rate is 40% and the capital gain rate is 20%, determine the asset depre ited by
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 5RE: Turnip Company purchased an asset at a cost of 10,000 with a 10-year life during the current year....
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![A company purchases a depreciable asset for $70,000. The asset is depreciated by
MACRS depreciation with a 5 year class life. The depreciation schedule is:
Year %
Depreciation
Book Value
0
$70,000
1
20
$14,000
56,000
2
32
22,400
33,600
3
19.2
13,440
20,160
4 11.52
8,064
12,096
5
11.52
8,064
4,032
6
5.76
4,032
0
If the ordinary income tax rate is 40% and the capital gain rate is 20%, determine the
after tax salvage value if:
a) The asset sold for $10,000 during the 8th year.
b) The asset sold for $10,000 during the 4th year.
c) The asset sold for $80,000 during the 4th year.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F54fb1c47-3135-49d2-a4da-da95179ef74a%2Fc9fee9b2-24c6-4290-96db-3f394c2e2eaa%2Fsfztbp7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A company purchases a depreciable asset for $70,000. The asset is depreciated by
MACRS depreciation with a 5 year class life. The depreciation schedule is:
Year %
Depreciation
Book Value
0
$70,000
1
20
$14,000
56,000
2
32
22,400
33,600
3
19.2
13,440
20,160
4 11.52
8,064
12,096
5
11.52
8,064
4,032
6
5.76
4,032
0
If the ordinary income tax rate is 40% and the capital gain rate is 20%, determine the
after tax salvage value if:
a) The asset sold for $10,000 during the 8th year.
b) The asset sold for $10,000 during the 4th year.
c) The asset sold for $80,000 during the 4th year.
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