An in-place machine with B= $165,000 was depreciated by using Modified Accelerated Cost Recovery System (MACRS) over a 3-yearperiod. The machine was sold for $60,000 at the end of year 2 when the company decided to import the item that required the use ofthe machine. In year 2, gross income (GI) = $1 million and operating expenses (OE) = $500,000. Determine the tax liability in year 2 ifTe = 35%.The tax liability in year 2 is determined to be $ 162167.95

Tax liability is defined as the total amount of money owed to the government in taxes by an…

Answered: n-place machine with B= $165,000 was…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An in-place machine with B = $120,000 was depreciated by MACRS over a 3-year period. The machine was sold for $60,000 at the end of year 2 when the company decided to import the item that required the use of the machine. In year 2, GI = $1.4 million and OE = $500,000. Determine the tax liability in year 2 if Te = 35%.
! Required information Determine the amount of any depreciation recapture (DR), capital gain (CG), or capital loss (CL) generated by each event described below. Use the result to determine the income tax effect, if Te = 32.5%. A Modified Accelerated Cost Recovery System (MACRS)-depreciated asset with a 7-year recovery period was sold after 8 years at an amount equal to 15% of its first cost of $160,000. The amount of depreciation recapture (DR) generated is determined to be $ 24000 The amount of taxes generated is determined to be $ .
A machine that had a first cost of $120,000 was depreciated by the MACRS method over a 3-year period. The machine was sold for $60,000 at the end of year 2, because the company decided to import the component made by the machine. If the company’s gross income was $1.4 million with operating expenses of $500,000, what was the tax liability in year 2 for an effective tax rate of 35%?
An automated assembly robot that cost $362,000 has a depreciable life of 5 years with a $90,000 salvage value. The MACRS (Modified Accelerated Cost Recovery System) depreciation rates for years 1, 2, 3, and 6 are 20.00%, 32.00%, 19.20%, and 5.76%, respectively. What is the book value at the end of year 3? Year 5? Year 6? The book value at the end of year 3 is $ . The book value at the end of year 5 is $ . The book value at the end of year 6 is $
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Estimate the gross income for Lopez Enterprises when it had a CFAT of $2.5 million, $900,000 in expenses, $900,000 in depreciation charges, and an effective tax rate of 26.4%.
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An asset purchased for $100,000 with S = $20,000 after 5 years was depreciated using the 5-year MACRS rates. Expenses averaged $18,000 per year and the effective tax rate is 30%. The asset was actually sold after 5 years of service for $22,000. MACRS rates in years 5 and 6 are 11.52% and 5.76%, respectively. The after-tax cash flow from the sale is closest to: (a) $27,760 (b) $17,130 (c) $26,870 (d) $20,585
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Freeman Engineering paid $40,000 for specialized equipment for use with their new global positioning system/geographic information system (GPS/GIS). The equipment was depreciated over a 3-year recovery period using Modified Accelerated Cost Recovery System (MACRS) depreciation. The company sold the equipment after 2 years for $8,000 when it purchased an upgraded system. Determine the amount of the depreciation recapture or capital loss involved in selling the asset. The amount of capital loss is determined to be $____
Small railcar manufacturing machinery had an $180,000 initial cost and a $30,000 projected salvage value after five years of use. In year 2, the revenue was $620,000, and the operating costs were $98,000. What would the difference in taxes paid in year 2 be if the depreciation method was straight line rather than MACRS if the company's effective tax rate was 36%? Year 2's MACRS depreciation rate is 32%.

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