Problema corporation has decided to replace an existing, Ask an Expert

Accounting

Problem:

A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using a five-year recovery period. The existing asset can be sold for $25,000. The new asset will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period.

Requirement:

Question: If the assumed tax rate is 40% on ordinary income and capital gains, what is the initial investment?

A. $52,440

B. $54,240

C. $50,000

D. $42,000

Note: Provide support for rationale.

View complete question

Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91171226

Have any Question?Write your Review or question?

Related Questions in Accounting Basics

Question - the social security administration increased the

Question - The Social Security Administration increased the taxable wage base from $118,300 to $120,100. The 6.2% tax rate is unchanged. Joe Burns earned over $120,000 each of the past two years. a. What is the percent i ...

Question -how susceptible are you to undue influence to

Question - How susceptible are you to undue influence to alter records of transactions? Do you have the strength of your convictions to stand up to a rich and powerful CEO who orders you to change the records?

Question - selected balance sheet and income statement

Question - Selected balance sheet and income statement information for Oracle Corporation follows. (Perform the required computations from the perspective of an Oracle shareholder. $ millions May 31, 2015 May 31, 2014 Op ...

Informatics and financial applicationsbackgroundthe

Informatics and Financial Applications Background The assignment of a payroll calculator demonstrates Excels ability to automate and present financial calculation information clearly. The ability to build and professiona ...

Question - a 13-year annuity pays 2800 per month and

Question - A 13-year annuity pays $2,800 per month, and payments are made at the end of each month. The interest rate is 12 percent compounded monthly for the first seven years, and 10 percent compounded monthly thereaft ...

Question - grouper inc issues 2085900 of 9 bonds due in 12

Question - Grouper Inc. issues $2,085,900 of 9% bonds due in 12 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 10%. What amount will Grouper receive when it issu ...

Question - on june 1 20x4 management of tiki entity te

Question - On June 1, 20X4, management of Tiki Entity (TE) decides to sell its torch-making machine for $50,000. The carrying amount of the machine as of June 1 is $70,000 (original cost of $100,000 less accumulated depr ...

Question - before closing the revenue and expense accounts

Question - Before closing the revenue and expense accounts for the month of June ABC Company's Retained Earnings Account had a $50,000 credit balance. ABC's Net Income for June was $20,000. ABC declared and paid a $5,000 ...

Question discipline awareness presentationthe purpose of

Question: Discipline Awareness Presentation The purpose of this assignment is for you to become more familiar with the interests, goals, research methods, and information dissemination channels associated with the primar ...

Question - pina colada corp reports the following for the

Question - Pina Colada Corp. reports the following for the month of June. Date Explanation Units Unit Cost Total Cost June 1 Inventory 122 $5 $610 June 12 Purchases 386 6 2,316 June 23 Purchases 186 7 1,302 June 30 Purch ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Accounting Basics Expert