Troy Industries purchased a new machine 4 year(s) ago for $82,000. It is being depreciated under...

Troy Industries purchased a new machine 4 year(s) ago for $82,000.

It is being depreciated under MACRS with a 5-year recovery period using the schedule.

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: $98,400; $57,400; $13,940; and $9,800.

a. The remaining book value is

$ . (Round to the nearest dollar.)

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%

Expert Solution

jeff jeffy answered 1 week ago

Book value and taxes on sale of assets Troy Industries purchased a new machine 3 year(s)...

Book value and taxes on sale of assets Troy Industries purchased a new machine 3 year(s) ago for $82,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule based on table below. 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: $98,400; $57,400; $23,780; and $16,600. Rounded Depreciation Percentages by...

Existing machine was purchased 2 years ago at a cost of $3,200. It is being depreciated...

Existing machine was purchased 2 years ago at a cost of $3,200. It is being depreciated straight line over its 8 year life. It can be sold now for $3,000 or used for 6 more years at which time it will be sold for an estimated $500. It provides revenue of $5,000 annually and cash operating costs of $2,000 annually. A replacement machine can be purchased now for $7,800. It would be used for 6 years, and depreciated straight line....

The Fischoeder's purchased a commercial freezer 6 years ago for $92,000. The freezer is being depreciated...

The Fischoeder's purchased a commercial freezer 6 years ago for $92,000. The freezer is being depreciated over its estimated 10-year life using the straight line method to a salvage value of zero. The company is planning to replace the freezer with a more energy efficient one that will cost $111,000 installed. If the old freezer can be sold for $58,000, what is the tax liability? Assume a marginal tax rate of 21 percent.

The value of a machine was $400,000 when purchased new one year ago. It has an...

The value of a machine was $400,000 when purchased new one year ago. It has an expected life of five years and the income statement shows the straight line depreciation rate as 20%. Using double declining balance depreciation, what is the value of the machine at the end of year two?

A machine currently in use was originally purchased 2 years ago for $40,000.The machine is being...

A machine currently in use was originally purchased 2 years ago for $40,000.The machine is being depreciated under MACRS using a 5-year recovery period;it has 3 years of usable life remaining. The current machine can be sold today to net $42,000 after removal and cleanup costs.A new machine,using a 3-year MACRS recovery period,can be purchased at a price of $140,000. It requires $10,000 to install and has a 3-year usable life.If the new machine were acquired, the investment in accounts...

A Machine purchased six years ago for Rs 150,000 has been depreciated to a book value...

A Machine purchased six years ago for Rs 150,000 has been depreciated to a book value of Rs 90,000. It originally has projected life of 15 years and zero salvage value. A new machine will cost Rs 350,000 and result in reduction of operating cost of Rs 40,000 in first year which will increase @8% for next eight years. The older machine could be sold for Rs 135,000. The cost of capital is 10%. The new machine will be depreciated...

Greensboro Company purchased a machine five years ago for $350,000. On its tax return, Greensboro depreciated...

Greensboro Company purchased a machine five years ago for $350,000. On its tax return, Greensboro depreciated the asset using the straight-line method to a zero salvage value over ten years. Now, this used machine could be sold for $120,000. A new machine has recently become available that will cost $950,000 and last for five years. If purchased, the new machine will save $300,000 per year in before tax operating costs and be depreciated by the straight-line method over five years...

Murl Plastics Inc. purchased a new machine one year ago at a cost of $39,000. Although...

Murl Plastics Inc. purchased a new machine one year ago at a cost of $39,000. Although the machine operates well, the president of Murl Plastics is wondering if the company should replace it with a new electronic machine that has just come on the market. The new machine would slash annual operating costs by two-thirds, as shown in the comparative data below: Present Machine Proposed New Machine Purchase cost new $ 39,000 $ 58,500 Estimated useful life new 6...

One year ago your company purchased a machine for $110,000. You have learned that the new,...

One year ago your company purchased a machine for $110,000. You have learned that the new, much better machine is available for $150,000. In will be depreciated on a straight line basis and has no salvage value. You expect the machine to produce $60,000 per year in revenue and cost $20,000 per year to operate for the next ten years. The current machine is expected to produce $40,000 per year in revenue and also costs $20,000 per year to operate....

(a) Rivers Limited purchased a machine for $200,000. The machine was depreciated at the rate of...

(a) Rivers Limited purchased a machine for $200,000. The machine was depreciated at the rate of 25% per annum using the straight-line method. In order to raise the reported profit, the company’s accountant decided to change the depreciation rate to 10% per annum. (b) Talent Limited is a recruitment agency. On 10 December 2018, Talent Limited helped Ocean Limited hire its Senior Manager and charged the company an agency fee of $30,000. The agency fee was received on 15 January...

Question