An Asset's Book Value Is $36,000 on January 1,Year 6

question 116

Multiple Choice

An asset's book value is $36,000 on January 1,Year 6.The asset is being depreciated $500 per month using the straight-line method.Assuming the asset is sold on July 1,Year 7 for $25,000,the company should record:

• A)Neither a gain or loss is recognized on this type of transaction.
• B)A gain on sale of $2,000.
• C)A loss on sale of $1,000.
• D)A gain on sale of $1,000.
• E)A loss on sale of $2,000.

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Definitions:

Holder

A party in possession of a negotiable instrument.

Fraud In The Factum

A type of fraud where a person is deceived into signing a document without understanding its true nature or consequences, resulting in an invalid agreement.

Negligent

Failing to exercise the care that a reasonably prudent person would exercise in similar circumstances.

Optometrist

An optometrist is a healthcare professional who specializes in examining the eyes for vision and health problems, prescribing corrective lenses, and providing certain types of eye care.