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16 July, 01:51

A company had sales last year of $3,000,000. They had operating expenses of $1,600,000. They bought a machine that cost $500,000 that has a life of 10 years and a salvage value of $15,000. Based on MACRS what was their Taxable Income?

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  1. 16 July, 02:16
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    The answer is $1,350000

    Explanation:

    Solution

    Given that:

    Company sales of last year = $3,000,000

    Operating expenses = $1,600,000

    The purchase of machine = $500,000

    Life of machine = 10 years

    The salvage value = $15,000

    Now,

    we find the Taxable income which is given below:

    Taxable income = sales - operating expenses - depreciation in year 1

    Taxable income = $3,000000 - $1,600000 - 10% * $500,000

    Therefore the atxable income is = $1,350000
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