Suppose a company has equipment that had an original cost of $50,000, and it sells this equipment 5 years later for $10,000. If the carrying value of this equipment for tax purposes is $8,000, what is the tax on the depreciation recapture and the cash flow associated with the sale of this equipment? The company's marginal tax rate is 40 percent.

Question

Quizplus · Accepted Answer

The Answer of Suppose a company has equipment that had an original cost of $50,000, and it sells this equipment 5 years later for $10,000. If the carrying value of this equipment for tax purposes is $8,000, what is the tax on the depreciation recapture and the cash flow associated with the sale of this equipment? The company's marginal tax rate is 40 percent.

Suppose a Company Has Equipment That Had an Original Cost