Heald and Swenson Inc. purchased a drill press for $850,000 one year and nine months ago. The
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Heald and Swenson Inc. purchased a drill press for $850,000 one year and nine months ago. The asset has a six-year life and has been depreciated according to the following accelerated schedule.
Year Percent of Cost
1 ................55%
2 ................20%
3 ................10%
4 ..................5%
5 ..................5%
6 ..................5%
The press was just sold for $475,000. The firm’s marginal tax rate is 35%. Calculate Heald and Swenson’s taxable profit and cash flow on the sale. Assume depreciation is spread evenly within each year.
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First bring depreciation up to date as of the time of sale Fifty ...View the full answer
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