On December 31, Strike Company Has Decided to Trade-In One

question 126

Multiple Choice

On December 31, Strike Company has decided to trade-in one of its batting cages for another one that has a cost of $500,000. The seller of the batting cage is willing to allow a trade-in amount of $11,000. The initial cost of the old equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?

• A) Loss of $11,000
• B) Gain of $11,000
• C) Loss of $19,000
• D) No loss or gain will be recorded.

---

Definitions:

Profit Maximization

The strategy of adjusting production and sales to achieve the maximum possible profits.

Input Increases

A situation where the amount, quality, or number of resources used in production grows, potentially leading to an increase in output.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, ceteris paribus.

Production Function

An equation, graph, or table that describes the maximum amount of output a firm can produce from a given set of inputs.