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Unformatted text preview: ions For each of the following cases, describe the various taxable
components of the funds received through sale of the asset, and determine the
total taxes resulting from the transaction. Assume 40% ordinary and capital
gains tax rates. The asset was purchased 2 years ago for $200,000 and is being
depreciated under MACRS using a 5-year recovery period. (See Table 3.2 on
page 100 for the applicable depreciation percentages.)
a. The asset is sold for $220,000.
b. The asset is sold for $150,000.
c. The asset is sold for $96,000.
d. The asset is sold for $80,000. 384 PART 3 LG4 Long-Term Investment Decisions 8–10 Change in net working capital calculation Samuels Manufacturing is considering the purchase of a new machine to replace one they feel is obsolete. The firm
has total current assets of $920,000 and total current liabilities of $640,000. As
a result of the proposed replacement, the following changes are anticipated in
the levels of the current asset and current liability accounts noted.
Account Change Accruals $...
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This document was uploaded on 01/19/2014.
- Fall '13