Questions
COMM_V 370 101-108 2025W1 COMM 370-Practice Midterm-2025-W1
Multiple dropdown selections
Concerning salvage value when assets are sold, letting: P = purchase price S: salvage value B: residual book value, When S < P: A. If S = B [ Select ] No tax adjustments are required. There is recaptured depreciation. There is a capital loss. B. If S > B [ Select ] There is recaptured depreciation. There is a capital loss. No tax adjustments are required. C. If S < B [ Select ] There is recaptured depreciation. There is a terminal loss. No tax adjustments are required.
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The question concerns salvage value when selling assets and the corresponding tax implications under three scenarios, with S representing salvage value, P the purchase price, and B the residual book value.
A. If S < P and S = B
In this scenario, the sale price equals the asset’s book value, so the amount received from the sale matches what has been recorded for depreciation to date. Because there is no gain or loss relative to the book value, there is no depreciation recapture, no capital gain or loss, and effectively no addit......Login to view full explanationLog in for full answers
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Concerning salvage value when assets are sold, letting: P = purchase price S: salvage value B: residual book value, When S < P: A. If S = B No tax adjustments are required. B. If S > B [ Select ] There is a capital loss. There is recaptured depreciation. No tax adjustments are required. C. If S < B [ Select ] No tax adjustments are required. There is recaptured depreciation. There is a terminal loss.
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