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? (Positive number for gain and negative number for loss)
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? (Positive number for gain and negative number for loss)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 2E
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