In: Finance
Using Excel (if applicable),
Apple is now at the end of the final year of their new iPhone project. The equipment originally cost $550,000, of which 80% has been depreciated. Apple can sell the used equipment today for $100,000, and its tax rate is 21%. Will the company pay tax or receive a tax credit and how much?
Cost of Equipment (Original Cost) | $ 550,000 |
Depreciated part | 80% |
Accumulated Depreciation | $ 440,000 |
Book value of Equipment | $ 110,000 |
The sale price of the equipment | $ 100,000 |
Loss on sale | $ (10,000) |
Since it is a loss, the company will get a tax credit on the loss. That is 21% of the loss | - |
Tax rate | 21% |
Tax credit | $ 2,100 |
Excel formulas: