Net salvage value. Allen air lines must liquidate some equipment that is being replaced. The equipment...

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Net salvage value. Allen air lines must liquidate some equipment that is being replaced. The equipment...

Net salvage value. Allen air lines must liquidate some equipment that is being replaced. The equipment originally cost $19 million of which 85% has been depreciated. The used equipment can be sold today for 6.65 million and its tax rate is 40%. What is the equipment after tax net salvage value?

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Answer 1

Answer #1

Book Value of the equipment = 19,000,000*15% = 2,850,000

After Tax Salvage Value = (6,650,000 - 2,850,000)*(1-tax rate) = 3,800,000*(1-40%) = 2,280,000

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Answer 2

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