In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to

Question:

In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to be used for welding operations, classified as seven-year recovery property, and has been depreciated by the MACRS method. If the robot is to be sold after five years, compute the amounts of gains (losses) for the following two s (assume that both capital gains and ordinary incomes are taxed at 34%):
(a) $20,000
(b) $99,000
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...