The book value of an asset is primarily used to compute the:
A) annual depreciation tax shield.
B) amount of cash received from the sale of an asset.
C) amount of tax saved annually due to the depreciation expense.
D) amount of tax due on the sale of an asset.
E) change in depreciation needed to reflect the market value of the asset.

Question

Quizplus · Accepted Answer

The book value of an asset is used to determine the gain or loss on the sale of the asset, which in turn affects the amount of tax due.

The Book Value of an Asset Is Primarily Used to Compute