VWX Bhd is expected to have an Earnings Before Tax (EBT) of RM80,000 at the end of the year. At the same time, the company plans to sell off an old van with four years of useful life which was bought at RM20,000. The van has been used for three years and is depreciated using the double declining balance method (DDBM). Currently, the market price for it is at RM22,000. If the capital gain tax is 20 percent and the corporate tax is 25 percent, compute the tax liability of the firm.

VWX Bhd is expected to have an Earnings Before Tax (EBT) of RM80,000 at the end of the year. At the same time, the company plans to sell off an old van with four years of useful life which was bought at RM20,000. The van has been used for three years and is depreciated using the double declining balance method (DDBM). Currently, the market price for it is at RM22,000. If the capital gain tax is 20 percent and the corporate tax is 25 percent, compute the tax liability of the firm.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 11P

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