3. Book value and taxes on sale of assets Troy Industries purchased a new machine 5...

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3. Book value and taxes on sale of assets Troy Industries purchased a new machine 5 year(s) ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule 1. Assume 40% ordinary and capital gains tax rates. a. What is the book value of the machine? b. Calculate the firm's tax liability if it sold the machine for each of the following amounts: $96,000; $56,000; $4,000; and $2,800. a. The remaining book value is $ (Round to the nearest dollar.) b. Calculate the firm's tax liability for each case: (Round to the nearest dollar.) Sale Price Capital Gain $ 96,000 $ $ Tax on Capital Gain Depreciation Recovery Tax on Recovery Total Tax $ $ (Round to the nearest dollar.) Sale Price Capital Gain Tax on Capital Gain Depreciation Recovery Tax on Total Recovery Tax $ 56,000 $ (Round to the nearest dollar.) Sale Capital Tax on Price Gain Capital Gain $ 4,000 $ $ (Round to the nearest dollar.) Depreciation Recovery Tax on Total Recovery Tax $ $ Sale Price Capital Gain Tax on Capital Gain Depreciation Recovery Tax on Recovery Total Tax $ 2,800 $ $ $ $ 1: Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Recovery year 3 years Percentage by recovery year* 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. 3. Book value and taxes on sale of assets Troy Industries purchased a new machine 5 year(s) ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule 1. Assume 40% ordinary and capital gains tax rates. a. What is the book value of the machine? b. Calculate the firm's tax liability if it sold the machine for each of the following amounts: $96,000; $56,000; $4,000; and $2,800. a. The remaining book value is $ (Round to the nearest dollar.) b. Calculate the firm's tax liability for each case: (Round to the nearest dollar.) Sale Price Capital Gain $ 96,000 $ $ Tax on Capital Gain Depreciation Recovery Tax on Recovery Total Tax $ $ (Round to the nearest dollar.) Sale Price Capital Gain Tax on Capital Gain Depreciation Recovery Tax on Total Recovery Tax $ 56,000 $ (Round to the nearest dollar.) Sale Capital Tax on Price Gain Capital Gain $ 4,000 $ $ (Round to the nearest dollar.) Depreciation Recovery Tax on Total Recovery Tax $ $ Sale Price Capital Gain Tax on Capital Gain Depreciation Recovery Tax on Recovery Total Tax $ 2,800 $ $ $ $ 1: Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Recovery year 3 years Percentage by recovery year* 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention.