XYZ Company bought a grinding machine on 1/1/17 for $75,000. The estimated life

Question

XYZ Company bought a grinding machine on 1/1/17 for $75,000. The estimated life of the machine was 5 years. Straight-line depreciation with a $0 salvage value was used. The income tax rate is 30%. On 1/1/19 (after 2 full years), the machine was sold. I. The net cash inflow from the sale of the machine fort $48,000 on 1/1/19 was A. $45,100 B. $46,100 C. $47,100 D. $48,100 E. $48,000 2. The net cash inflow from the sale of the machine fort $41,000 on 1/1/19 was A. $41,200 B. $42,200 C. $43,200 D. $44,200 E. $41,000

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount Cost of purchase                75,000.00 Life in years                          5.00 Depreciation per year = 75000/5                15,000.00 Depreciation for 2017 and 2018 = 15000*2                30,000.00 Carrying amount =75000 - 30000                45,000.00 1) C 47,100 Sale Value                48,000.00 Book Value                45,000.00 Gain (Loss) on sale                  3,000.00 Tax at 30% = 3000*.30                      900.00 Net cash inflow= 48000 - 900                47,100.00 2) B 42,200 Sale Value                41,000.00 Book Value                45,000.00 Gain (Loss) on sale = 41000 - 45000                (4,000.00) Tax at 30% = -4000*.30                (1,200.00) Net cash inflow= 41000 - (-1200)                42,200.00 3) E45,000 Sale Value                45,000.00 Book Value                45,000.00 Gain (Loss) on sale                               -   Tax at 30% = 0*.30                               -   Net cash inflow= 45000 - 0                45,000.00

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