Question

Please answer part B. Part A is correct. Will rate highly.

A company purchases an industrial laser for $153,000. The device has a useful life of 4 years and a salvage value (market value) at the end of those four years of $50,000. The before-tax cash flow is estimated to be s80,000 per vear. a. You, of course, suggested applying the 3-year MACRS (GDS) method instead of the straight-line method. Given b. Based on the MACRS depreciation schedule for this asset, if the industrial laser was sold for $85,000 (depreciation recapture) or loss on the disposal of the asset at the end of this year? neffective tax rate of 25 % , determine the depreciation schedule and the after tax cash flow. year two (consider year two to be the "year 2" row in the table in Part (a), what will be the amount of gain Click the icon to view the GDS Recovery Rates () for the 3-yoar property class a. Determine the MACRS depreciation amounts and the after tax cash flow for this laser. Fill in the table below. (Round to the nearest dollar.) Depreciation, $ EOY ATCF, S 153.000 72749 50995 2 68009 77002 22659 65665 Copy 4 11337 100334 b. The amount of gain on the disposal of the asset at the end of year two is $51003. (Round to the nearest dollar.)

Answer 1

Acquisition cost = 153000

Less: Depreciation year 1: 50995

Year 2: 68009

Book value = 33996

Selling price = 85000

Gain = 85000-33996= 51004

Hence Gain on disposal =$51004