The galaxy Corporation disposes a capital asset with an original cost of $180,000 and accumulated depreciation of $91,000 for $47,000. The company's tax rate is 40%. Calculate the after-tax cash inflow from the disposal of the capital asset.

Question

Quizplus · Accepted Answer

($180,000 - $91,000) = $89,000; $89,000 - $47,000 = $42,000 loss; $42,000 × 0.4 = $16,800 tax savings from loss plus $47,000 proceeds = $63,800

The Galaxy Corporation Disposes a Capital Asset with an Original