Genetic Insights Co. purchases an asset for $13,398. This asset qualifies as a s

Question

Genetic Insights Co. purchases an asset for $13,398. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1. 2. 3. 4. 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $3,872 Calculate tax paid on gain on disposal. Round the answer to two decimals Your Answer: nswer Save Page 4 of 10 Next Page Save All Responses Go to Submit Quiz Ouiz Status e 3 Saved

Explanation / Answer

Book value as on date of sale=13398(1-0.1429-0.2449-0.1749-0.1249-0.0893-0.0893)

=$1792.6524

Hence gain=(3872-1792.6524)=$2079.3476

Hence tax paid=($2079.3476*30%)=$623.80(Approx).

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