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Homework answers / question archive / Crosson Corporation recently sold a used machine for $40,000
Crosson Corporation recently sold a used machine for $40,000. The machine had a book value of $60,000 at the time of the sale. What is the after-tax cash flow from the sale, assuming the company's marginal tax rate is 20 percent?
Answer:
C . $ 44,000
Step-by-Step explanation
Loss = Book value - Sold price
= $60,000 - $40,000
= $20,000
Tax saving from loss = 20% of $20,000 loss
= $4,000
After-tax cash flow = Proceeds + Tax saving from loss
= $40,000 + $4,000
= $44,000
