Question

Diego Inc. wants to replace a 7-year-old machine with a new machine that is more efficient. The old machine cost $50,000 when new and has a current book value of $12,000. Diego can sell the machine to a foreign buyer for $14,000. Diego's tax rate is 25%. What is the cash inflow that should be recorded for the initial year regarding this transaction?

Answer 1

Answer:$10,500

Step-by-step explanation:

The only cash inflow is the $14,000 from the sale of machinery less the 25% tax rate.