The Hopewell Factory disposes a capital asset with an original cost of $195,000 and accumulated depreciation of $115,000 for $55,000.The managerial accountant has a tax rate of 40%.
Required
Compute the after-tax cash inflow from the disposal of the capital asset (include proceeds).

Question

Quizplus · Accepted Answer

D)[($195,000 - $115,000)= $80,000 - $55,000 = $25,000 loss × .40 = $10,000 tax savings from loss plus $55,000 proceeds = $65,000.

The Hopewell Factory Disposes a Capital Asset with an Original