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MCCB Corp. bought a machine since 3 years ago for RM 90,000 with a remaining useful...

MCCB Corp. bought a machine since 3 years ago for RM 90,000 with a remaining useful life of 2 years and a salvage value of RM 20,000. The company had also incurred additional costs of transportation and training staff of RM 10,000 and RM 5,000 respectively when purchasing the machine. At present, this machine can be sold at RM 40,000 in a market. The company has earnings before tax of RM 50,000 and it usually adopts the sum of year’s digit method (SYDM) as a depreciation strategy. If the corporate tax rate is 30 percent and the capital gain tax rate is 15 percent, determine the following:

a) Determine the cost of asset

b) Using sum of years digit method (SYDM) determine the annual depreciation in the third (3rd) year

c) Using sum of years digit method (SYDM) determine the book value in the third (3rd) year

d) Determine the earnings after-tax

e) Determine the recaptured depreciation after tax:

f)  Determine the total tax liability

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Expert Solution

ekkarill92 answered 2 years ago
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