Delta Mechanical Systems purchased a material conveyor
system three years ago. Now, the company is going to sell the system and
acquire more advanced technology. Data relating to this equipme
|
Market value now |
$15,000 |
|
Original cost |
24,000 |
|
Book value now, for tax purposes |
8,000 |
|
Book value now, for financial accounting purposes |
15,000 |
|
Corporate tax rate |
40% |
a. How much depreciation has been claimed on the conveyor system for tax purposes? For financial accounting purposes?
b. What will be the after tax cash flow from the sale of this asset?
c. What will be the after tax cash flow from the sale of the asset if its market value is only $6,000?