Trickster Holdings purchased an asset costing $1,480,622

Finance Aug 24, 2020

Trickster Holdings purchased an asset costing $1,480,622. Freight costs of $61,647 and installation costs of $40,833 were also required to place the machine in an operational state.

The firm expects to use the asset for 7 years and the Taxation Office advises the asset has a useful life of 9 years.

Calculate the depreciation tax benefit/saving (to the nearest whole number ignoring the $ sign) that will apply in each allowable year.

The Australian Company Tax Rate applies.

Expert Solution

Computation of the depreciation tax benefit:-

Total cost = Asset cost + Freight costs + Installation costs

= 1480622 + 61647 + 40833

= 1583102

Annual depreciation = Total cost / Estimated useful life

= 1583102 / 9

= 175900.22

Depreciation tax benefit = Annual depreciation * Tax rate

= 175900.22 * 30%

= 52770.07 Or 52770

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