The amount of taxes generated is incorrect... Required informationDetermine the amount of any depreciation recapture (DR), capital gain (CG), or capital loss (CL) generated by each eventdescribed below. Use the result to determine the income tax effect, if Te=30.5%.A Modified Accelerated Cost Recovery System (MACRS)-depreciated asset with a 7-year recovery period was sold after 8 years at anamount equal to 25% of its first cost of $170,000.The amount of depreciation recapture (DR) generated is determined to be $42500The amount of taxes generated is determined to be $ 12962.5

Section 1245 assets comprise personal property used in trade or business and held for over 12…

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Business

Accounting

The amount of taxes generated is incorrect...

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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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

The amount of taxes generated is incorrect...

Required information
Determine the amount of any depreciation recapture (DR), capital gain (CG), or capital loss (CL) generated by each event
described below. Use the result to determine the income tax effect, if Te=30.5%.
A Modified Accelerated Cost Recovery System (MACRS)-depreciated asset with a 7-year recovery period was sold after 8 years at an
amount equal to 25% of its first cost of $170,000.
The amount of depreciation recapture (DR) generated is determined to be $
42500
The amount of taxes generated is determined to be $ 12962.5

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