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Question & Answer: The Autumn Leaf Glass Company with a estimated pre-tax income of $220000 this year purchased a non-depreciable as…..

The Autumn Leaf Glass Company with a estimated pre-tax income of $220000 this year purchased a non-depreciable asset for $42000 ten years ago. The company has decided to liquidate the asset. Over the years the asset has appreciated and is expected to sell for $56000. Given the following tax table, what will be the aftertax cash flow from the sale? Tax Calculation Pre-Tax Amount Income Base Tax Over Base Tax $O + 7,500+ 22,250+ 1,000,000317,900+ 60,000 90,000 200,000 400,000113,900 (0.15 (0.25 (0.34 (0.39 (0.34 (0.34 (0.35 13,750 20,000,000 6.416,667+

The Autumn Leaf Glass Company with a estimated pre-tax income of $220000 this year purchased a non-depreciable asset for $42000 ten years ago. The company has decided to liquidate the asset. Over the years the asset has appreciated and is expected to sell for $56000. Given the following tax table, what will be the aftertax cash flow from the sale?

Expert Answer

 

sale price of the aset = 56000

(-) cost of the asset = 42000

profit os sale = 14000

(-) tax @15% = (2100)

11900

After tx cash flow nfrom tax = 56000- 11900 = 44100

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