Dragonian Corporation Sells a Depreciable Asset

question 54

Essay

Dragonian Corporation sells a depreciable asset. Dragonian paid $50,000 for the asset. Accelerated depreciation on the asset is $12,000 up to the date of sale. Straight-line depreciation is $8,000. Determine the amount and character of the gain (loss) on the sale under each of the following assumptions:
a.The asset is equipment. Dragonian deducted the maximum depreciation and the sales price is $44,000.
b.The asset is an office building purchased in 1984. Dragonian deducted the maximum depreciation and the sales price is $54,000.
c.The asset is an office building purchased in 2006. Dragonian deducted straight-line depreciation and the sales price is $54,000.

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Definitions:

Categorical Approach

A method of classification based on distinct and separate categories, typically used in contexts like diagnosing mental disorders.

Dimensional Approach

A method of categorizing characteristics on a continuum rather than as distinct categories, often used in psychology to describe personality or mental disorders.

Personality

A rephrased definition: The composite of emotional, attitudinal, and behavioral response patterns that define an individual's unique personal identity and ways of interacting with their environment.

Schizophrenic

Pertains to a mental disorder characterized by disruptions in thought processes, perceptions, emotional responsiveness, and social interactions.