Question
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
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