The Golden Shades Corporation disposes a capital asset with an original cost of $320,000 and accumulated depreciation of $140,000 for a salvage price of $42,000. Golden Shades's tax rate is 35%. Calculate the after-tax cash inflow from the disposal of the capital asset.

Question

Quizplus · Accepted Answer

($320,000 - $140,000) = $180,000; $180,000 - $42,000 = $138,000 loss; $138,000 × 0.35 = $48,300 tax savings from loss plus $42,000 proceeds = $90,300

The Golden Shades Corporation Disposes a Capital Asset with an Original