An Asset's Book Value Is $18,000 on June 30,Year 6

question 66

Multiple Choice

An asset's book value is $18,000 on June 30,Year 6.The asset is being depreciated at an annual rate of $3,000 on the straight-line method.Assuming the asset is sold on December 31,Year 7 for $15,000,the company should record:

• A)A loss on sale of $1,500.
• B)A gain on sale of $1,500.
• C)Neither a gain nor a loss is recognized on this type of transaction.
• D)A gain on sale of $3,000.
• E)A loss on sale of $3,000.

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Definitions:

Opportunity Cost

Forgoing the possibility of benefits from other options by selecting one specific choice.

Appetizers

Small dishes served before the main course of a meal to stimulate the appetite.

Dessert

A sweet course typically served at the end of a meal.

Opportunity Cost

The cost of choosing one option over another, representing the value of the foregone alternative that wasn't chosen.