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A company purchases an industrial laser for $150,000. The device has a useful life of ten years and a salvage value (market value) at the end of those ten years of $20,000. The before-tax cash flow is estimated to be $80,000 per year. You, of course, suggested applying the Seven-year MACRS (GDS) method instead of the straight-line method. Based on the MACRS depreciation schedule for this asset, if the industrial laser was sold for $60,000 in year four what will be the amount of gain (depreciation recapture) or loss on the disposal of the asset at the end of this year

Sagot :

Tundexi

Answer:

$13,140

Explanation:

                           MACRS-7

           Opening BV    Dep. Rate     Depreciation     Closing BV  

Year            A                      B             C=150000*B         D=A-C

1             150,000           14.29%              21,435             128,565

2            128,565           24.49%              36,735            91,830

3             91,830             17.49%               26,235           65,595

4             65,595            12.49%               18,735            46,860

Gain on sale = Salvage value - Book value

Gain on sale = $60,000 - $46,860

Gain on sale = $13,140

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