An Asset's Book Value Is $36,000 on January 1,Year 6

question 116

Multiple Choice

An asset's book value is $36,000 on January 1,Year 6.The asset is being depreciated $500 per month using the straight-line method.Assuming the asset is sold on July 1,Year 7 for $25,000,the company should record:

• A)Neither a gain or loss is recognized on this type of transaction.
• B)A gain on sale of $2,000.
• C)A loss on sale of $1,000.
• D)A gain on sale of $1,000.
• E)A loss on sale of $2,000.

---

Definitions:

Society

A community of individuals living in a structured and organized way, sharing customs, laws, and organizations.

Tax Structure

The system and various rates at which individuals and entities are taxed by government authorities.

Elasticity of Demand

A measure of how sensitive the quantity demanded of a good or service is to a change in its price, indicating how changes in price affect consumer demand.

Gas Stations

Businesses that sell fuel for automobiles, motorcycles, and other vehicles, often offering additional services like convenience store products.