power manufacturing has equipment that it purchased 5 years ago for $2,450,000. the equipment was used for a project that was intended to last for 7 years and was being depreciated over the life of the project. however, due to low demand, the project is being shut down. the equipment was depreciated using the straight-line method and can be sold for $380,000 today. the company's tax rate is 34 percent. what is the aftertax salvage value of the equipment?

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kayemperk5715 kayemperk5715

13-12-2022
Business

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power manufacturing has equipment that it purchased 5 years ago for $2,450,000. the equipment was used for a project that was intended to last for 7 years and was being depreciated over the life of the project. however, due to low demand, the project is being shut down. the equipment was depreciated using the straight-line method and can be sold for $380,000 today. the company's tax rate is 34 percent. what is the aftertax salvage value of the equipment?

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Bhuvangarg Bhuvangarg · Answer 1 · 2022-12-20T12:29:34+01:00

Value of Salvage After Tax: The price a good is sold for becomes income on the statement and is subject to taxation. The value or amount that remains after deducting the tax is referred to as the "after-tax salvage value."

How is the salvage value determined after taxes?

After-charge rescue worth of the resource implies resource's deals cost short expense paid on contrast between the resource's business value and resource's book esteem.

How is the salvage value of equipment determined?

The salvage value of an asset can be determined by subtracting the initial purchase price from the amount of accumulated depreciation.

What is the salvage value formula?

Step 1: The total amount of depreciation is calculated by multiplying the annual depreciation by the number of years the asset was depreciated. Step 2: The total amount spent on depreciation over the vehicle's useful life is deducted from the purchase price.

Book value as of the date of sale = Cost-Accumulated Depreciation =$2,450,000-(350,000*5) =$700,000; loss on sale =$700,000-380,000; after-tax salvage value =Sale proceeds + (loss on sale*Tax rate) =380,000+(320,000*0.34); annual depreciation =(Cost-Salvage value)/Useful Life =(2,450,000/7) =$350,000/

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