Sumner Sold Equipment That It Uses in Its Business for $30,200

question 84

Multiple Choice

Sumner sold equipment that it uses in its business for $30,200. Sumner bought the equipment a few years ago for $79,900 and has claimed $39,950 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?

• A)$9,750 §1231 loss.
• B)$9,750 §1245 loss.
• C)$49,700 ordinary loss.
• D)$9,750 capital loss.
• E)None of the choices are correct.

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Definitions:

Variable Cost

Expenses that change in proportion to the production output or sales of a company, such as raw materials and labor costs.

Measure Of Activity

A metric used to quantify the level of production or the volume of operations in a business.

Horizontal Analysis

A side-by-side comparison of two or more years’ financial statements.

Vertical Analysis

The presentation of a company’s financial statements in common-size form.