![P10-7 Calculating Salvage Value [LO1] Consider an asset that costs $228,800 and is depreciated straight-line to zero over its](http://img.homeworklib.com/questions/73fcb660-75c2-11ea-bc82-5ff59de57939.png?x-oss-process=image/resize,w_560)
Homework Answers
correct option is "B"- 57772
Depreciation expense per year =Cost / useful life
= 228800 /16
= $ 14300 per year
Total accumulated depreciation over 8 years= 8* 14300 = 114400
Book value at end of year 8 =Cost -accumulated depreciation
= 228800-114400
= 114400
Gain /(loss)) on sale =sale value - book value
= 28600 --114400
= -85800 loss
Tax saving due to loss= -85800 *34%= -29172
After tax cash flow from sale of asset = Sale value - tax expense(saving)
= 28600 - (-29172)
= 28600+29172
= 57772
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