A business machine purchased April 10, 2017, for $98,000. On August 15, 2019, the machine was...

A business machine purchased April 10, 2017, for $98,000. On August 15, 2019, the machine was fully deprecated and sold for $67,000.

a) What is the amount of the gain or loss from the sale of the machine?

b) What is the nature/character of the gain or loss from the sale of the machine?

Expert Solution

Original Cost of Asset $98,000

Less: Depreciation ($98,000)

-----------------

Net Book Value Nil

a) Sale Price is higher than net book value hence there is gain on sale of asset

Gain on sale of asset= Sale proceeds from sale asset – Net Book value

=$67,000-0

=$67,000

b) As it is gain sale of asset hence receipt is Capital receipt and gain is capital gain/ capital profit

jeff jeffy answered 1 year ago

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