A Company Sells a Long-Term Asset That Originally Cost $180,000

question 7

Multiple Choice

A company sells a long-term asset that originally cost $180,000 for $60,000 on December 31, 2008.The accumulated depreciation account had a balance of $72,000 after the current year's depreciation of $18,000 had been recorded.The company should recognize a

• A)$120,000 loss on disposal.
• B)$48,000 gain on disposal.
• C)$48,000 loss on disposal.
• D)$30,000 loss on disposal.

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Definitions:

Net Income

The amount of profit left over, after all expenses and taxes have been subtracted from total revenue.

Tax Expense

Tax Expense is the total amount of taxes owed by an individual or corporation to the federal, state, and local government, reflecting in the financial statements of the period in which the tax is accrued.

Premium Amortization

The systematic reduction of a premium paid above the par value of a bond, allocated over the bond's life until maturity.

Bond Amortization Schedule

A schedule that details the reduction of a bond's principal amount over time, often including payments of both principal and interest.