A Photocopier Cost $95,000 When New and Has Accumulated Depreciation

question 143

Multiple Choice

A photocopier cost $95,000 when new and has accumulated depreciation of $90,000.If the business discards this plant asset,the result is ________.

• A)a loss of $5,000
• B)a loss of $11,250
• C)a gain of $5,000
• D)no gain or no loss

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Definitions:

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, usually expressed in the form of interest payments on loans, bonds, or credit lines.

Net Income

The remaining earnings of a company once expenses and taxes are subtracted from the gross revenue.

Times Interest Earned Ratio

A financial ratio that measures a company’s ability to meet its interest obligations based on its earnings before interest and taxes (EBIT).

Default

Failure to fulfill a financial obligation, such as missing a loan repayment.