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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
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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?

User Lowrin
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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.

User Amir Rahman
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