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An industrial corporation bought a manufacturing facility 3 years ago for $9,000,000 in due to economic downturn the company decided to sell the facility now to payback some of its liabilities for $12,500,000. Assume CCA rate is 15% (Declining Balance) and an effective tax rate of 35%. Find the capital loss or gain and disposal tax effect (tax credit or liability).

An industrial corporation bought a manufacturing facility 3 years ago for $9,000,000 in due to economic downturn the company decided to sell the facility now to payback some of its liabilities for $12,500,000. Assume CCA rate is 15% (Declining Balance) and an effective tax rate of 35%. Find the capital loss or gain and disposal tax effect (tax credit or liability).

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An industrial corporation bought a manufacturing facility 3 years ago for $9,000,000 in due to economic downturn the company decided to sell the facility now to payback some of its liabilities for $12,500,000. Assume CCA rate is 15% (Declining Balance) and an effective tax rate of 35%. Find the capital loss or gain and disposal tax effect (tax credit or liability).
Transcribed Image Text:An industrial corporation bought a manufacturing facility 3 years ago for $9,000,000 in due to economic downturn the company decided to sell the facility now to payback some of its liabilities for $12,500,000. Assume CCA rate is 15% (Declining Balance) and an effective tax rate of 35%. Find the capital loss or gain and disposal tax effect (tax credit or liability).
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