A firm is selling an existing asset for 5,000. The asset, when ...

[Caiter2013]

A firm is selling an existing asset for 5,000. The asset, when purchased, cost 10,000, was being depreciated under MACRS using a five-year recovery period and has been depreciated for four full years.
 
  If the assumed tax rate is 40 percent on ordinary income and capital gains, the tax effect of this transaction is ________.
  A) 0 tax liability
  B) 1,320 tax liability
  C) 1,160 tax liability
  D) 2,000 tax benefit

Question 2

The return on an asset is the change in its value plus any cash distribution over a given period of time, expressed as a percentage of its ending value.
 
  Indicate whether the statement is true or false

[mcomstock09]

Answer to Question 1

B

Answer to Question 2

FALSE

[Caiter2013]

Thank you

[mcomstock09]

Happy to help you