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

question 204

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

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Definitions:

Income Inequality

The unequal distribution of income among individuals or households within a population.

Goods And Services

The physical items (goods) and activities or benefits (services) that fulfill consumer needs and wants.

Progressive Tax

At the individual level, a tax whose average tax rate increases as the taxpayer’s income increases. At the national level, a tax for which the average tax rate (= tax revenue/GDP) rises with GDP.

Average Tax Rate

Total tax paid divided by total taxable income or some other base (such as total income) against which to compare the amount of tax paid. Expressed as a percentage.