An Asset Was Acquired on October 1, 2018, for $78,000

question 155

Multiple Choice

An asset was acquired on October 1, 2018, for $78,000 with an estimated 5-year life and $13,000 residual value. The company uses units-of-production depreciation and expects the asset to produce 20,000 units. Calculate the gain or loss if the asset was sold on March 31, 2021, for $58,000. Actual production was: 2018=500 units; 2019=3,000 units; 2020=3,500 units; 2021=1,000 units.

• A) $11,200 gain.
• B) $19,000 gain.
• C) $6,000 gain.
• D) $12,500 gain.

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