Sandhill Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $14,000, what are the after-tax proceeds from the sale, assuming the marginal tax rate is 35 percent? (Round answer to 2 decimal places, e.g. 15.25.) EXHIBIT 11.7 MACRS Depreciation Schedules by Allowable Recovery PeriodThe MACRS schedule lists the tax depreciation rates that firms use for assets placed into service afterthe Tax Reform Act of 1986 went into effect. The table indicates the percentage of the cost of the assetthat can be depreciated in each year during the period that it is being used. Year I is the year in whichthe asset is first placed into service.Year3-Year5-Year7-Year10-Year15-Year20-Year15.00%33.33%20.00%14.29%10.00%3.75%244.4532.0024.4918.009.507.22314.8119.2017.4914.408.556.6847.4111.5212.4911.527.706.18511.528.939.226.935.716.5.768.927.376.235.2978.936.555.904.8984.466.565.904.5296.555.914.46103.285.904.46115.914.46125.904.46135.914.46145.904.46155.914.46162.954.46174.46184.46194.46204.46212.24Total100.00%100.00%100.00%100.00%100.00%100.00%

The term depreciation refers to the process of systematically allocating the cost of an asset over…

Answered: Sandhill Corporation just purchased…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 14RE: (Appendix 11.1) Auburn Company purchased an asset on January 1, Year 1, for 150,000. The asset has a...

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Sandhill Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $14,000, what are the after-tax proceeds from the sale, assuming the marginal tax rate is 35 percent? (Round answer to 2 decimal places, e.g. 15.25.)

EXHIBIT 11.7 MACRS Depreciation Schedules by Allowable Recovery Period
The MACRS schedule lists the tax depreciation rates that firms use for assets placed into service after
the Tax Reform Act of 1986 went into effect. The table indicates the percentage of the cost of the asset
that can be depreciated in each year during the period that it is being used. Year I is the year in which
the asset is first placed into service.
Year
3-Year
5-Year
7-Year
10-Year
15-Year
20-Year
1
5.00%
33.33%
20.00%
14.29%
10.00%
3.75%
2
44.45
32.00
24.49
18.00
9.50
7.22
3
14.81
19.20
17.49
14.40
8.55
6.68
4
7.41
11.52
12.49
11.52
7.70
6.18
5
11.52
8.93
9.22
6.93
5.71
6.
5.76
8.92
7.37
6.23
5.29
7
8.93
6.55
5.90
4.89
8
4.46
6.56
5.90
4.52
9
6.55
5.91
4.46
10
3.28
5.90
4.46
11
5.91
4.46
12
5.90
4.46
13
5.91
4.46
14
5.90
4.46
15
5.91
4.46
16
2.95
4.46
17
4.46
18
4.46
19
4.46
20
4.46
21
2.24
Total
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%

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