"Eastern Corporation has $21,000,000 in equipment that has a 15 year class life. The equipment is 8 years old. Eastern is sellin
g the equipment for $10,000,000. Eastern uses simplified straight line depreciation (zero salvage value) and has a marginal tax rate of 34%. What is the terminal cash flow? Assume no working capital."
One of the methods of recording accounting transactions for income and expenses is cash basis accounting , where the transactions are only recorded when income is received in cash or expenses are paid in cash. This accounting method is not accepted by GAAP (Generally accepted accounting principle ) and IFRS ( International financial reporting standards ) because this method violates the income ( revenue ) and expense recognition principle.
