Custom Cars Purchased $39,000 of Fixed Assets Two Years Ago

question 35

Multiple Choice

Custom Cars purchased $39,000 of fixed assets two years ago that are classified as 5-year MACRS property.The MACRS rates are 20 percent,32 percent,19.2 percent,11.52 percent,11.52 percent,and 5.76 percent for Years 1 to 6,respectively.The tax rate is 21 percent.If the assets are sold today for $19,000,what will be the aftertax cash flow from the sale? Ignore bonus depreciation.

• A)$16,358.88
• B)$17,909.09
• C)$18,720.00
• D)$18,941.20
• E)$19,000.00

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Definitions:

Payroll Taxes

Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

Liabilities

Financial obligations or debts that a business needs to settle in the future as a result of past transactions or events.

Accounting Period

A specific period of time used for financial reporting purposes, typically a fiscal year or quarter.

Wage and Tax Statement

A document provided by employers to employees detailing the employee's earnings and taxes withheld during the year; commonly referred to as a W-2 form.