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In: Accounting

Noah bought a machine for $163,600, depreciated it $46,574, and sold it for $267,500. Noah’s marginal...

Noah bought a machine for $163,600, depreciated it $46,574, and sold it for $267,500. Noah’s marginal tax rate is 32%.

What is the tax Noah will pay on the sale of the machine?

Solutions

Expert Solution

The tax Noah will pay on the sale of the machine is calculated as follows:

$
Cost of Machine        $163,600
Less:Depreciation       ($46,574 )
Book Value of Machine       $117,026
Sale of Machine       $267,500
Gain on Sale of Machine       $150,474

The tax Noah will pay on the sale of the machine = (Gain on Sale of Machine - Depreciation ) * 32%

                                                                       = ($150,474 - $46,574) * 32%

                                                                       = $103,900 * 32%

                                                                       = $33,248

The tax Noah will pay on the sale of the machine is $33,248

ekkarill92 answered 2 years ago
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