The current book value of a fixed asset that was purchased two years ago is used in the computation of which one of the following?
A) Depreciation tax shield
B) Tax due on the current salvage value of that asset
C) Current year's operating cash flow
D) Change in net working capital
E) MACRS depreciation for the current year

Question

Quizplus · Accepted Answer

The current book value is used to determine the tax due on the current salvage value of an asset, as it helps calculate the gain or loss on the sale of the asset.

The Current Book Value of a Fixed Asset That Was