A company purchased a valuable capital asset three years ago for $8.2 million and it currently has a book value of $6.2 million. The asset is now being sold for $11.6 million.

(a) What is the amount of the depreciation recapture, ordinary losses, and capital gain associated with the sale of the asset?

• Depreciation Recapture: $ Blank 1. Calculate the answer by read surrounding text. million
• Ordinary Losses: $ Blank 2. Calculate the answer by read surrounding text. million
• Capital Gain: $ Blank 3. Calculate the answer by read surrounding text. million

(b) Assuming that the company is subject to a federal income tax rate of 21%, a state income tax rate of 5.6% and a federal capital gains tax rate of 15%, what is the combined state plus federal tax rate and how much will the company owe in taxes as the result of this sale?

• Combined State & Federal Tax Rate: Blank 4. Calculate the answer by read surrounding text. %
• Taxes Owed: $ Blank 5. Calculate the answer by read surrounding text. million 

Answer rating: 100% (QA)

Answer Solution Step 1 Depreciation is demunition of an asset on account of its ware and tear Deprec... View the full answer