An asset with a book value of $320,000 is sold at a $240,000 pre- tax gain in a year when the tax rate is 40%. is the net after- tax cash inflow resulting from this transaction.

Question

Quizplus · Accepted Answer

The net after-tax cash inflow is the pre-tax gain minus the taxes on the gain. The taxes on the gain are $240,000 x 40% = $96,000. Therefore, the net after-tax cash inflow is $240,000 - $96,000 = $144,000.

An Asset with a Book Value of $320,000 Is Sold