A Tax Shield Loss Is Created Upon the Sale of an Asset

question 6

Multiple Choice

A tax shield loss is created upon the sale of an asset from a pool will occur whenever:

• A)salvage is greater than zero.
• B)the asset has been partially depreciated.
• C)the corporation keeps two sets of books.
• D)the asset's market value exceeds its book value.

---

Definitions:

Activity Index

A measure used to understand the level of activity in a particular area, such as production or sales, often used in planning and forecasting.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and generate profit.

Target Net Income

The specific amount of net income that a company aims to achieve within a certain period.

Margin Of Safety

A financial ratio or metric that measures the difference between actual sales and the breakeven point, indicating the extent to which sales can decline before a business incurs a loss.