Troy Industries purchased a new machine 4 year(s) ago for $80,000.It is being depreciated under MACRS with a 5-year recovery period using the schedule attached.Assume21% 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; $13,600; and $9,500. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.)Rounded Depreciation Percentages by Recovery Year Using MACRS forFirst Four Property ClassesPercentage by recovery year*Recovery year3 years5 years7 years10 years133%20%14%10%45%32%25%18%15%13%18%14%47%12%12%12%12%9%9%6.5%9%8%79%7%84%6%6%106%114%Totals100%100%100%100%*These percentages have been rounded to the nearest whole percent to simplify calculations whileretaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actualunrounded percentages or directly apply double-declining balance (200%) depreciation using the half-yearecconvention.PrintDoneTand neiD Trom a iveANSwersIn as jast as 30 minutEs

Initial cost = $80,000 Tax rate = 21%

Troy Industries purchased a new machine 4 year(s) ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule attached. Assume 21% 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; $13,600; and $9,500.

Troy Industries purchased a new machine 4 year(s) ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule attached. Assume 21% 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; $13,600; and $9,500.

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets

Section19.5: Declining-balance Method Of Depreciation

Problem 1WT

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