Asked by Jordan Tongen on May 05, 2024
Verified
When a firm sells an asset for ____, it realizes a capital gain and must pay income taxes on it.
A) book value
B) less than book value
C) more than book value
D) any amount
Capital Gain
The profit earned from the sale of an asset when the selling price exceeds its purchase price.
Book Value
The net asset value of a company, calculated as total assets minus intangible assets (patents, goodwill) and liabilities.
Income Taxes
Taxes on an individual's or corporation's income imposed by the government.
- Become familiar with the influence of taxes and asset depreciation on the cash flows within a project.
Verified Answer
NZ
Nicolette ZalecznyMay 08, 2024
Final Answer :
C
Explanation :
When a firm sells an asset for more than its book value, it realizes a capital gain. The gain is subject to income taxes.
Learning Objectives
- Become familiar with the influence of taxes and asset depreciation on the cash flows within a project.
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