Martinez Owns an Asset That Cost $87,000 with Accumulated Depreciation

question 42

Multiple Choice

Martinez owns an asset that cost $87,000 with accumulated depreciation of $40,000.The company sells the equipment for cash of $42,000.At the time of sale,the company should record:

• A)A gain on sale of $2,000.
• B)A loss on sale of $2,000.
• C)A loss on sale of $5,000.
• D)A gain on sale of $5,000.
• E)A loss on sale of $45,000.

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Definitions:

Creative Destruction

A process where new innovations cause the demise of older industries or technologies, leading to economic growth and development.

Economic Recession

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Automobile Production

is the series of processes involved in manufacturing automobiles, including assembly, painting, and quality control, among others.

Allocative Efficiency

Allocative efficiency occurs when resources are distributed in a way that maximizes the net benefit to society, matching consumer preferences with production.