Ask Question
23 August, 20:36

Active Alarm is replacing its old device manufacturing machine with a new one. The old machine is being sold for $200,000 and it has a book value of $50,000. The tax rate for Active Alarm is 40%. How much cash will Active Alarm net from the sale of the old machine?

+2
Answers (1)
  1. 23 August, 22:49
    0
    The sale of the machine will generate an after-tax income of 90,000

    Explanation:

    The company will be paying a tax income for the diference between the sales price and the book value at a rate of 40%

    200,000 - 50,000 = 150,000 x 40% = 60,000 tax income

    150,000 gross profit - 60,000 tax income = 90,000 net gain from sale of machine
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Active Alarm is replacing its old device manufacturing machine with a new one. The old machine is being sold for $200,000 and it has a book ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers