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On June 1,2011,Buffalo Corporation Purchased and Placed in Service 7-Year

question 24

Essay

On June 1,2011,Buffalo Corporation purchased and placed in service 7-year MACRS tangible property costing $100,000.On November 10,2014,Buffalo sold the property for $102,000 after having taken MACRS $47,525 in depreciation deductions.What is the amount and character of Buffalo's gain?


Definitions:

Working Capital

The gap between an organization's current assets and its current liabilities, reflecting the business's short-term fiscal stability and operational effectiveness.

Salvage Value

The projected sales value of an asset at the termination of its effective life.

Financially Attractive

Describes opportunities or investments that are likely to provide a good return or prove to be profitable.

Discount Rate

The discount rate applied in DCF analysis to calculate the current value of future cash streams.

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