Tara Purchased a Machine for $40,000 to Be Used in Her

question 21

Multiple Choice

Tara purchased a machine for $40,000 to be used in her business.The cost recovery allowed and allowable for the three years the machine was used are as follows: If Tara sells the machine after three years for $15,000,how much gain should she recognize?

• A) $3,480.
• B) $6,360.
• C) $9,240.
• D) $11,480.
• E) None of the above.

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Definitions:

Depreciation Expense

The allocated portion of the cost of a fixed asset, written off each year over the asset's useful life for accounting and tax purposes.

Scarcity

Occurs when the amount people desire exceeds the amount available at a zero price.

Choice

The act of selecting between two or more possibilities, often present in decision-making processes.

Economics

The study of how people use their scarce resources to satisfy their unlimited wants