Mary Sells Her Personal Use Automobile for $20,000

question 249

Multiple Choice

Mary sells her personal use automobile for $20,000. She purchased the car two years ago for $17,000. What is Mary's recognized gain or loss? It increased in value due to its excellent mileage, yet safe design.

• A) $0
• B) $3,000
• C) $17,000
• D) $20,000
• E) None of the above

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Definitions:

Market Rate

The current price at which an asset or service can be bought or sold in a particular market.

Coupon Rate

The interest rate stated on a bond or other fixed-income security, expressed as a percentage of its face value.

Issued At 98

A term indicating that a bond or other security was issued at a price below its par or face value, in this case, at 98% of the face value.

Book Value

The net value of a company's assets as recorded on the balance sheet, calculated by subtracting liabilities from the total assets.