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Ronnie's Custom Cars Purchased Some Non-Current Assets Two Years Ago

question 21

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Ronnie's Custom Cars purchased some non-current assets two years ago for €39,000.The assets are depreciated using 20% reducing balances.Ronnie is considering selling these assets now so he
Can buy some newer non-current assets which utilize the latest in technology.Ronnie has been
Offered €19,000 for his old assets.What is the net cash flow from the salvage value if the tax rate is
34%?


Definitions:

Straight-Line Rate

The method of calculating equal depreciation expenses for an asset over its useful life.

Useful Life

The expected period over which an asset is anticipated to be economically usable by one or more users.

Double-Declining-Balance Method

An accelerated depreciation method that counts the depreciation of tangible assets at twice the normal rate.

Residual Value

The estimated value of an asset at the end of its useful life, often considered for depreciation purposes.

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