The tax loss on the sale and the tax benefit related to it. Introduction: Tax loss: It is that loss which is incurred when the total deduction that can be claimed in a financial year exceeds the total assessable income of the year. Tax benefit: It is the allowable deduction on the assessable income of the taxpayer, with the intent of reducing the tax liability and burden of the taxpayer. MACRS depreciation method: MACRS stands for modified accelerated cost recovery system, which is a tool of depreciation, used in the U.S. for tax purposes. This system places all the assets into categories with pre-specified depreciation periods.

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Answer 1

Question

Chapter 12, Problem 31P

a.

Summary Introduction

To calculate: The tax loss on the sale and the tax benefit related to it.

Introduction:

Tax loss:

It is that loss which is incurred when the total deduction that can be claimed in a financial year exceeds the total assessable income of the year.

Tax benefit:

It is the allowable deduction on the assessable income of the taxpayer, with the intent of reducing the tax liability and burden of the taxpayer.

MACRS depreciation method:

MACRS stands for modified accelerated cost recovery system, which is a tool of depreciation, used in the U.S. for tax purposes. This system places all the assets into categories with pre-specified depreciation periods.

b.

Summary Introduction

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

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Students have asked these similar questions

Grove Media plans to acquire production equipment for $845,000 that will be depreciated for tax purposes as follows: year 1, $329,000; year 2, $189,000; and in each of years 3 through 5, $109,000 per year. A 10 percent discount rate is appropriate for this asset, and the company’s tax rate is 20 percent. Required: Compute the present value of the tax shield resulting from depreciation. 2. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($169,000 per year).

Sandhill Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $14,000, what are the after-tax proceeds from the sale, assuming the marginal tax rate is 35 percent? (Round answer to 2 decimal places, e.g. 15.25.)

Easter Corporation will replace one of its assets with an updated model. The current asset was purchased two years ago at a cost of $70,000. It has been depreciated under MACRS using a five-year recovery period. The company can sell this existing asset for $30,000. The new asset is going to cost $80,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on both ordinary income and capital gains, the initial investment will be equal to what amount after adjusting for taxes?

Answer 2

Question

Chapter 12, Problem 31P

a.

Summary Introduction

To calculate: The tax loss on the sale and the tax benefit related to it.

Introduction:

Tax loss:

It is that loss which is incurred when the total deduction that can be claimed in a financial year exceeds the total assessable income of the year.

Tax benefit:

It is the allowable deduction on the assessable income of the taxpayer, with the intent of reducing the tax liability and burden of the taxpayer.

MACRS depreciation method:

MACRS stands for modified accelerated cost recovery system, which is a tool of depreciation, used in the U.S. for tax purposes. This system places all the assets into categories with pre-specified depreciation periods.

b.

Summary Introduction

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

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Answer 3

Question

Chapter 12, Problem 31P

a.

Summary Introduction

To calculate: The tax loss on the sale and the tax benefit related to it.

Introduction:

Tax loss:

It is that loss which is incurred when the total deduction that can be claimed in a financial year exceeds the total assessable income of the year.

Tax benefit:

It is the allowable deduction on the assessable income of the taxpayer, with the intent of reducing the tax liability and burden of the taxpayer.

MACRS depreciation method:

MACRS stands for modified accelerated cost recovery system, which is a tool of depreciation, used in the U.S. for tax purposes. This system places all the assets into categories with pre-specified depreciation periods.

b.

Summary Introduction

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

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Answer 4

Question

Chapter 12, Problem 31P

a.

Summary Introduction

To calculate: The tax loss on the sale and the tax benefit related to it.

Introduction:

Tax loss:

It is that loss which is incurred when the total deduction that can be claimed in a financial year exceeds the total assessable income of the year.

Tax benefit:

It is the allowable deduction on the assessable income of the taxpayer, with the intent of reducing the tax liability and burden of the taxpayer.

MACRS depreciation method:

MACRS stands for modified accelerated cost recovery system, which is a tool of depreciation, used in the U.S. for tax purposes. This system places all the assets into categories with pre-specified depreciation periods.

b.

Summary Introduction

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

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Answer 5

Chapter 12, Problem 31P

a.

Summary Introduction

To calculate: The tax loss on the sale and the tax benefit related to it.

Introduction:

Tax loss:

It is that loss which is incurred when the total deduction that can be claimed in a financial year exceeds the total assessable income of the year.

Tax benefit:

It is the allowable deduction on the assessable income of the taxpayer, with the intent of reducing the tax liability and burden of the taxpayer.

MACRS depreciation method:

MACRS stands for modified accelerated cost recovery system, which is a tool of depreciation, used in the U.S. for tax purposes. This system places all the assets into categories with pre-specified depreciation periods.

b.

Summary Introduction

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

Answer 6

Chapter 12, Problem 31P

a.

Summary Introduction

To calculate: The tax loss on the sale and the tax benefit related to it.

Introduction:

Tax loss:

It is that loss which is incurred when the total deduction that can be claimed in a financial year exceeds the total assessable income of the year.

Tax benefit:

It is the allowable deduction on the assessable income of the taxpayer, with the intent of reducing the tax liability and burden of the taxpayer.

MACRS depreciation method:

MACRS stands for modified accelerated cost recovery system, which is a tool of depreciation, used in the U.S. for tax purposes. This system places all the assets into categories with pre-specified depreciation periods.

Answer 7

Chapter 12, Problem 31P

a.

Summary Introduction

To calculate: The tax loss on the sale and the tax benefit related to it.

Introduction:

Tax loss:

It is that loss which is incurred when the total deduction that can be claimed in a financial year exceeds the total assessable income of the year.

Tax benefit:

It is the allowable deduction on the assessable income of the taxpayer, with the intent of reducing the tax liability and burden of the taxpayer.

MACRS depreciation method:

MACRS stands for modified accelerated cost recovery system, which is a tool of depreciation, used in the U.S. for tax purposes. This system places all the assets into categories with pre-specified depreciation periods.

Answer 8

b.

Summary Introduction

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

Answer 9

b.

Summary Introduction

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 12 - Prob. 1DQ Ch. 12 - Why does capital budgeting rely on analysis of...Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - What does the term mutually exclusive investments...Ch. 12 - Prob. 6DQ Ch. 12 - If a corporation has projects that will earn more...Ch. 12 - What is the net present value profile? What three...Ch. 12 - How does an assetâ€™s ADR (asset depreciation...Ch. 12 - Prob. 1P

Solution Summary: The author explains the MACRS depreciation method used in the U.S. for tax purposes.

Concept explainers

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

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Chapter 12 Solutions

Solution Summary: The author explains the MACRS depreciation method used in the U.S. for tax purposes.

Concept explainers

To calculate: The gain and related tax on the sale of an asset. Introduction: Tax liability: An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.

Want to see the full answer?

Chapter 12 Solutions

To calculate: The gain and related tax on the sale of an asset.

Introduction:

Tax liability:

An amount of tax that is owed by a company or an individual to the taxing authority is termed as tax liability.