An Asset Was Purchased Three Years Ago for $100,000 and Can

question 85

Essay

An asset was purchased three years ago for $100,000 and can be sold for $40,000 today. The asset has been depreciated using the MACRS 5-year recovery period and the firm pays 40 percent taxes on both ordinary income and capital gain.
(a) Compute recaptured depreciation and capital gain (loss), if any.
(b) Find the firm's tax liability.

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Definitions:

Likert Scale

A Likert scale is a psychometric scale commonly involved in research that employs questionnaires. It is the most widely used approach for scaling responses in survey research, such that the term is often used interchangeably with rating scale, even though the two are not synonymous.

Aptitude

A natural ability to do something or to learn something.

Disrespect

The act or feeling of showing a lack of respect or courtesy towards someone or something.

Response Choices

The set of options given to respondents to choose from in a survey or a questionnaire.