A Corporation Has Decided to Replace an Existing Machine with a Newer

question 19

Multiple Choice

A corporation has decided to replace an existing machine with a newer model.The old machine had an initial purchase price of $35,000,and has $20,000 in accumulated depreciation.If the 40% tax rate applies to the corporation and the old asset can be sold for $10,000,what will be the tax effect of the replacement?

• A) No effect
• B) Loss of $2,000
• C) Refund of $2,000
• D) Loss of $4,000

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Definitions:

Potential Disadvantages

Possible negative outcomes or drawbacks that may arise from a particular action, decision, or situation.

Life Cycle

The sequence of stages or phases that an organism, product, or service goes through from its inception to its termination or death.

Stages

Distinct phases or steps within a process or lifecycle, each characterized by unique features, challenges, or goals.

Adjourning

The final phase in group development where the team completes its tasks and disbands, typically associated with project teams or temporary committees.