In year 1, Expert Chemicals purchased a forklift truck for $300 000, and at the end of year 3 sold it for $55530. At the time of sale $233070 in accumulated depreciation had been recorded. Note the accumulated depreciation is the same for accounting and tax purposes.
1. What was the forklift’s carrying amount at the time of sale?
2 Calculate the profit or loss on the sale.
3 Determine the after-tax cash flow from the sale of the forklift. The firm’s tax rate is 40 percent.