Unformatted text preview: ch it had planned to sell
for its $180,000 market value. Although the crane was not needed with the
old machine tool, it would be used to position raw materials on the new
LG4 8–7 Book value Find the book value for each of the assets shown in the following
table, assuming that MACRS depreciation is being used. (Note: See Table 3.2 on
page 100 for the applicable depreciation percentages.) Asset Installed cost Recovery
(years) Elapsed time
(years) A $ 950,000 5 3 B 40,000 3 1 C 96,000 5 4 D 350,000 5 1 E 1,500,000 7 5 LG4 8–8 Book value and taxes on sale of assets 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 3.2 on page 100.
Assume 40% ordinary and capital gains tax rates.
a. What is the book value of the machine?
b. Calculate the firm’s tax liability if it sold the machine for each of the following amounts: $100,000; $56,000; $23,200; and $15,000. LG4 8–9 Tax calculat...
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