Winslow Is Considering the Purchase of a €225,000 Piece of Equipment.The

question 64

Multiple Choice

Winslow is considering the purchase of a €225,000 piece of equipment.The equipment will be depreciated using 20% reducing balances.The company expects to sell the equipment after four
Years at a price of €50,000.What is the after-tax cash flow from this sale if the tax rate is 35%?

• A)€37,036
• B)€38,880
• C)€64,756
• D)€47,770
• E)€53,892

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Definitions:

Subsidiary Ledger

A detailed ledger that contains all the transaction details of a specific account, which then summarizes into the general ledger.

Long-term Liability

Financial obligations that are due after a period of more than one year, such as bonds payable or long-term loans.

Cost Method

An accounting method used to value inventory or investments, where the cost of the goods or the investment purchase price is the basis for the value on the balance sheet.

Long-term Investments

Generally, (1) investments in stocks and bonds of other companies that companies normally hold for many years, and (2) long-term assets, such as land and buildings, not currently being used in operations.