An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated...

An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $20,000, the company should record:

Select one:

a. Neither a gain nor a loss is recognized on this transaction.

b. A gain on sale of $2,000.

c. A gain on sale of $13,000.

d. A loss on sale of $13,000.

Solutions

Expert Solution

Answer:- Option B

A Gain on sale of $2,000

Given Book Value of the Asset as on December 31, Year 5 = $ 18,000

As on 31 December , Year 5 Asset is sold for $ 20,000

Here , Book Value is given So we dont need any adjustment of Depriciation

The sale proceeds from the Asset is More than its book Value By $ 2,000

Gain on Sale of Asset = $ 20,000 - $18000

Gain on Sale of Asset = $ 2,000

ekkarill92 answered 2 years ago

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