Carter Company Disposed of an Asset at the End of the Eighth

question 62

Multiple Choice

Carter Company disposed of an asset at the end of the eighth year of its estimated life for $10,000 cash.The asset's life was originally estimated to be 10 years.The original cost was $50,000 with an estimated residual value of $5,000.The asset was being depreciated using the straight-line method.What was the gain or loss on the disposal?

• A)$1,000 loss.
• B)$4,000 loss.
• C)$5,500 gain.
• D)$10,000 gain.

---

Definitions:

Efficiency Loss

The loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Demand and Supply

The fundamental concepts of economics that demonstrate how the quantity of goods or services demanded by consumers relates to the quantity supplied by producers at various prices.

Inelastic

Describing a situation where the demand or supply for a product does not significantly change in response to price changes.

Excise Tax

Excise tax is a tax on the sale or use of specific products or transactions, often levied to discourage certain behaviors or raise revenue.