Troy Industries purchased a new machine 3 years ago for 80,000. It is being depreciated under MACRS with a 5 year recovery period using the percentages given in Table 4.2 on page 117. Assume a 40% tax rate. A. What is the book value of this machine B. Calculate the firms tax liability if it sold the machine for each of the following amounts: $100,000, $56,000, $23,200 and $15,000.
Troy Industries purchased a new machine 3 years ago for 80,000. It is being depreciated under MACRS with a 5 year recovery period using the percentages given in Table 4.2 on page 117. Assume a 40% tax rate. A. What is the book value of this machine B. Calculate the firms tax liability if it sold the machine for each of the following amounts: $100,000, $56,000, $23,200 and $15,000.
Related questions
âTroy Industries purchased a new machine 5 âyear(s) ago for $78,000.
It is being depreciated under MACRS with aâ 5-year recovery period using the schedule
. Assume 40% ordinary and capital gains tax rates.
a. What is the book value of theâ machine?
b. Calculate theâ firm's tax liability if it sold the machine for each of the followingâ amounts:
$93,600â;
$54,600â;
$3,900â;
and
$2,700.
| Rounded Depreciation Percentages by Recovery Year Using MACRS for | |||||
| First Four Property Classes | |||||
| Percentage by recovery year* | |||||
| Recovery year | 3 years | 5 years | 7 years | 10 years | |
| 1 | 33% | 20% | 14% | 10% | |
| 2 | 45% | 32% | 25% | 18% | |
| 3 | 15% | 19% | 18% | 14% | |
| 4 | 7% | 12% | 12% | 12% | |
| 5 | 12% | 9% | 9% | ||
| 6 | 5% | 9% | 8% | ||
| 7 | 9% | 7% | |||
| 8 | 4% | 6% | |||
| 9 | 6% | ||||
| 10 | 6% | ||||
| 11 | 4% | ||||
| Totals | 100% | 100% | 100% | 100% | |
Book value and taxes on sale of assetsââTroy Industries purchased a new machine 2 âyear(s) ago for $80,000.
It is being depreciated under MACRS with aâ 5-year recovery period using the schedule
| Percentage by recoveryâ year* | ||||
| Recovery year | 3 years | 5 years | 7 years | 10 years |
| 1 | 33â% | 20â% | 14â% | 10â% |
| 2 | 45â% | 32â% | 25â% | 18â% |
| 3 | 15â% | 19â% | 18â% | 14â% |
| 4 | 7â% | 12â% | 12â% | 12â% |
| 5 | 12â% | 9â% | 9â% | |
| 6 | 5â% | 9â% | 8â% | |
| 7 | 9â% | 7â% | ||
| 8 | 4â% | 6â% | ||
| 9 | 6â% | |||
| 10 | 6â% | |||
| 11 | 4â% | |||
| Totals | 100â% | 100â% | 100â% | 100â% |
| â*These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for taxâ purposes, be sure to apply the actual unrounded percentages or directly applyâ double-declining balanceâ (200%) depreciation using theâ half-year convention. | ||||
a. What is the book value of theâ machine?
b. Calculate theâ capital gain, tax on capital gain, depreciation recovery, tax on recovery, and total tax for each of the followingâ amounts:
$96,000â;
$56,000â;
$38,400â;
$26,900.
