Question

The book value of an asset is primarily used to compute the: Multiple Choice annual depreciation tax shield. amount of tax due on the sale of an asset. amount of tax saved annually due to the depreciation expense. amount of cash that can be received from the sale of an asset. change in depreciation needed to reflect the market value of the asset.

Answer 1

b. Amount of tax due on the sale of an asset

Step-by-step explanation:

The book value of an asset is primarily used to compute the amount of tax due on the sale of an asset. The book value of an asset is value of asset on the company/ It is important to note that the book value is not a fair market value. Book value is an accounting and tax calculation. The salvage value of an asset is after-tax cash flow in an amount equal to sales price minus the tax due based on the sales price minus the book value.