During the Current Year,Hugo Sells Equipment for $150,000

question 37

Multiple Choice

During the current year,Hugo sells equipment for $150,000.The equipment cost $175,000 when placed in service two years ago,and $55,000 of depreciation deductions were allowed.The results of the sale are

• A)LTCG of $30,000.
• B)Sec.1231 gain of $30,000.
• C)Sec.1245 ordinary income $30,000.
• D)Sec.1250 ordinary income of $30,000.

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Definitions:

Depreciation Expense

The allocated cost of an asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Comparative Balance Sheet

A financial statement displaying the balance of assets, liabilities, and equity for two or more time periods side by side, facilitating trend analysis and financial comparison over time.

Financing Activities

Activities that result in changes in the size and composition of the equity capital or borrowings of the entity, as reported in the cash flow statement.

Fiscal Year

A twelve-month period used for accounting purposes and financial reporting by an organization, which may not align with the calendar year.