A Company Sells a Long-Lived Asset That Originally Cost $200,000

question 135

Multiple Choice

A company sells a long-lived asset that originally cost $200,000 for $50,000 on December 31,2014.The accumulated depreciation account had a balance of $110,000 after the current year's depreciation of $45,000 had been recorded.The company should recognize a:

• A)$100,000 loss on sale.
• B)$40,000 gain on sale.
• C)$40,000 loss on sale.
• D)$25,000 loss on sale.

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Definitions:

Yearly Cash Inflows

The total amount of money received by a company over a year, from various sources including sales, investments, and financing.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of a retirement strategy.

Income Taxes

Taxes levied by governments on individuals or corporations' income or profits.

Capital Budgeting

The process that a business undertakes to evaluate potential major projects or investments, involving the calculation of future cash flows and the application of discounting techniques.