An Asset Is Purchased on January 1 for $40,000

question 228

Multiple Choice

An asset is purchased on January 1 for $40,000.It is expected to have a useful life of five years after which it will have an expected residual value of $5,000.The company uses the straight-line method.If it is sold for $30,000 exactly two years after it is purchased,the company will record a:

• A)gain of $6,000.
• B)gain of $4,000.
• C)loss of $4,000.
• D)loss of $6,000.

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