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Problem 1 A $500,000 asset has been depreciated with the straight-line method over...

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Accounting

Problem 1
A $500,000 asset has been depreciated with the straight-line method over an eight-year life. The
estimated salvage value was $80,000. At the end of the sixth year, the asset was sold for $210,000.
(a) What is the estimated book value after 6 years, based on depreciation? What is the calculated
difference between book value and sold market value for the asset? (Round both answers to the
nearest dollar.)
(b) Which of the following occurred: Recaptured Depreciation, Loss on Disposal, or Capital Gain?
(c) If this method of depreciation were allowed under tax law, and a tax rate of 33% applied, how
much tax would be owed or credited to the firm due to the sale of the asset?
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