Joan Bought a Business Machine for $15,000

question 6

Multiple Choice

Joan bought a business machine for $15,000.In a later year,she sold the machine for $12,800 when the total allowable depreciation is $8,500.The depreciation actually taken on the tax returns totaled $8,000.Joan must recognize a gain (or loss) of

• A)no gain or loss.
• B)($3,200).
• C)$6,800.
• D)$6,300.

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Definitions:

Net Operating Income

Earnings generated from a company's regular business operations, excluding deductions for interest and taxes.

Fixed Manufacturing Overhead

Expenses related to the production process that remain constant regardless of the operational output, including equipment depreciation and facility rent.

Inventories

The range of goods or materials held by a company for the purpose of production, sale, or repair in the ordinary course of business.

Net Operating Income

The profit generated from a company's regular business operations, excluding expenses from interest and taxes.