Calculate the amount of annual depreciation

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Consider a machine which a large Australian company bought for $20,000 three years ago. The machine has an expected life of 10 years and an expected salvage value of zero. The company uses straight-line depreciation. Assume a 30% tax rate.

(a) Calculate the amount of annual depreciation.

(b) Calculate the current book value of the machine.

(c) If the machine were sold today for $10,000, what would be the taxes associated with the sale?

(d) If the machine were sold today for $14,000, what would be the taxes associated with the sale?

(e) If the machine were sold today for $15,000, what would be the taxes associated with the sale?

Reference no: EM131627685

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