A machine was sold in December 20x3 for $23,000. It was purchased in January 20x1 for $34,000, and depreciation of $31,000 was recorded from the date of purchase through the date of disposal. Assuming a 30% income tax rate, the after-tax cash inflow at the time of sale is:

Question

A machine was sold in December 20x3 for $23,000. It was purchased in January 20x1 for $34,000, and depreciation of $31,000 was recorded from the date of purchase through the date of disposal. Assuming a 30% income tax rate, the after-tax cash inflow at the time of sale is:
Multiple Choice

$24,100.

$27,100.

$22,100.

$6,900

GPT 3.5 · Answer

The after-tax cash inflow at the time of sale can be calculated by taking the selling price and subtracting the accumulated depreciation and any taxes owed.

Selling price: $23,000
Accumulated depreciation: $31,000
Tax rate: 30%

Tax owed: $23,000 - $31,000 = -$8,000 (a negative value because the accumulated depreciation exceeds the selling price)
Tax deduction: $8,000 * 30% = $2,400 (the tax owed is deducted from the income before taxes are calculated)

After-tax cash inflow: $23,000 - $31,000 + $2,400 = -$5,600

The correct answer is not provided among the multiple-choice options.