A firm purchased equipment at a total cost of $287,000, which was depreciated straight - line over seven years. After five years, the equipment was sold for $98,900. What is the ATCF at a tax rate of 34 percent?
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- Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $93,000. It is classified in the property class category of a single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS, was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 35% tax rate) if a. the sales price was $30,000? b. the sales price was $29,053.20? c. the sales price was $21,000? (Round to the nearest cent.) MACRS Fixed Annual Expense Percentages by Recovery Class Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 5 11.52% 8.93% 9.22% 6 5.76% 8.93% 7.37% 7…You work for Tamimi Industries, which purchased robotics equipment for $430,000 six years ago. The equipment is in place today and has a total 10-year useful life, no salvage value, and a 5-year MACRS recovery period. The effective tax rate is 23% and the actual cash flow and depreciation amounts are shown. Year GI, $ Expenses, $ Depreciation, $ 1 250,000 −120,000 100,000 2 280,000 −120,000 160,000 3 200,000 −122,000 96,000 4 260,000 −124,000 57,600 5 260,000 −126,000 57,600 6 180,000 −128,000 28,800 EBIT is calculated for years 1 to n and includes the P or S amounts. Group startsTrue or FalseFinance Steel PIc is selling an existing asset for $25,000. The asset was purchased three years ago at a cost of $100,000 and was depreciated based on the straight line method over a five-year life, which of the following is the tax benefit of this transaction, given a tax rate of 40%? a. $5,000 b. $7,000 c. $4,000 d. $6,000 An engineering company has a proposal to replace its existing machine with a new machine. The new machine costs $55,000 and has installation costs of $5,000. The machine will be depreciated using the straight-line method over five years. The new machine is expected to result in an incremental cost saving of $20.000. The firm has a 40% tax rate. The annual incremental after-tax cash flow from operations for year 1O a. $17,100O b. $15,500O c. $16,800O d. $14,700 A security analyst forecasts an expected return of 15% over the next year for Fenway Ltd's ordinary shares which have a beta of 1.5. If the risk-free rate is 4% and the market risk premium is 8%, which of…
- Troy Industries purchased a new machine 3 year(s) ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule.. Assume 21% ordinary and capital gains tax rates. What is the book value of the machine? b. Calculate the firm's tax liability for each case if it sold the machine for each of the following amounts: $ 100,000, 56,000 , 23,200 and $ 15,000Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $780,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $880,000, which includes interest revenue of $25,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes.Daly Publishing Corporation recently purchased a truck for $30,000. Under MACRS, the first year’s depreciation was $6,000. The truck driver’s salary in the first year of operation was $32,000. The company’s tax rate is 30 percent. Required: 1-a. Calculate the after-tax cash outflow for the acquisition cost and the salary expense. 1-b. Calculate the reduced cash outflow for taxes in the first year due to the depreciation.
- Power Manufacturing has equipment that it purchased 6 years ago for $2,900,000. The equipment was used for a project that was intended to last for 8 years. However, due to low demand, the project is being shut down. The equipment was depreciated using the straight-line method and can be sold for $470,000 today. The company's tax rate is 21 percent. What is the aftertax salvage value of the equipment? Multiple Choice $513,350 $383,300You work for Tamimi Industries, which purchased robotics equipment for $500,000 six years ago. The equipment is in place today and has a total 10-year useful life, no salvage value, and a 5-year MACRS recovery period. The effective tax rate is 21% and the actual cash flow and depreciation amounts are shown. GI, S 250,000 280,000 200,000 260,000 260,000 180,000 Expenses, $ |-120,000 -120,000 F122,000 -124,000 -126,000 128,000 Depreciation, $ 100,000 160,000 96,000 57,600 57,600 28,800 Year 1 3 14 5 6 EBIT is calculated for years 1 to nand includes the Por Samounts. True or False True FalseMax Corporation purchased a machine for $80,000 and depreciated it straight-line to zero over its 8-year life. After six years, Max sold the machine for $38,000. If Max has a 21% tax rate, what is the cash flow associated with the sale of the machine? $41,780 $20,000 $35,900 $34,220 $38,000
- Avalon Industries buys equipment for $90,000, expects to use it for six years, and then sell it for $6,000. Using the straight-line method, the company should report annual depreciation for the equipment of: Multiple Choice O $15,000. O O $14,000. $28,000. $31,750.NOS Corp. purchased equipment for $180,000. They sold the equipment at the end of three years for $147,000. If the expected useful life of the equipment was ten years with a residual value of $30,000, and they use straight-line depreciation, which of the following is true regarding the journal entry to record the sale of the equipment? Select one: a. Credit Gain on Sale for $23,000 b. Credit Gain on Sale for $6,000 c. Credit Gain on Sale for $9,000 d. Credit Gain on Sale for $3,000 e. Credit Gain on Sale for $12,000A company purchased a drill press costing $230,000 in year 0. The drill press, classified as seven-year recovery property, has been depreciated by the MACRS method. If it is sold at the end of three years for (1) $150,000 or (2) $100,000, compute the gains (losses) for each situation. Assume that both capital gains and ordinary income are taxed at 34%.
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