Question: Is this correct? because i got a negative answer Dover Corporation bought a long-term asset for $125,000. The asset has a 25% CCA rate. At
Is this correct? because i got a negative answer
Dover Corporation bought a long-term asset for $125,000. The asset has a 25% CCA rate. At the end of year 5, the firm sold the asset for 25% of its original value. In the year of 2020, the firm just paid $520 in dividends and $311 in interest expense. The addition to retained earnings is $412.46. and net new equity is $850. The tax rate is 34 percent. Sales are $7,250 and depreciation is $6685.
Given this information, determine the value of the terminal loss or recapture at the end of the year
| Year | Beginning UCC | CCA | Ending UCC |
| (beginning UCC*25% CCA rate) | (Beginning UCC CCA) | ||
| 1 | 62,500 | 15,625 | 46,875 |
| 2 | 109,375 | 27,343 | 82,032 |
| 3 | 82,032 | 20,508 | 61,524 |
| 4 | 61,524 | 15,381 | 46,143 |
| 5 | 46,143 | 11,536 | 34,607 |
| CCA recapture | lower of selling price and original cost - ending UCC | |
| (125,000*0.25) -34,607 | ||
| 31,240-34,607 | ||
| -3367 | ||
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