Pat Purchased a Used Five-Year Class Asset on March 15

question 49

Multiple Choice

Pat purchased a used five-year class asset on March 15, 2019, for $60,000.He did not elect § 179 expensing. Determine the cost recovery deduction for 2019 for earnings and profits purposes.

• A)$2,000
• B)$3,000
• C)$6,000
• D)$12,000

Identify and calculate cash proceeds from the sale of assets and their reporting in investing activities.

Understand the impact of changes in working capital accounts on cash flows.

Determine cash flows related to the acquisition and disposition of fixed assets.

Calculate and interpret free cash flow.

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Definitions:

Total Income

The sum of all revenue and gains for an entity over a specified period of time.

Present Value

The present value of a future amount of money or a series of future cash flows, discounted at a specific rate of return.

Internal Rate of Return

The discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.