Terry Has Sold Equipment Used in Her Business

question 1924

Multiple Choice

Terry has sold equipment used in her business. She acquired the equipment three years ago for $50,000 and has recognized $30,000 of depreciation across the years in use. In order to recognize any Sec. 1231 gain, she must sell the equipment for more than

• A) $30,000.
• B) $50,000.
• C) $0.
• D) $20,000.

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Definitions:

Overhead Cost

Indirect expenses related to the production of goods or services, such as rent, utilities, and salaries of management, that cannot be directly tied to a specific product.

Activity Cost Pools

Groupings of individual costs, driven by the same cost drivers, used in activity-based costing to allocate costs more precisely to products or services.

Departmental Overhead Rates

Calculated rates used to allocate overhead costs to specific departments or units within a business.

Machine Hours

A measure of the amount of time a machine is operated, used in assessing cost or efficiency in production.