On 31 December 2019 an Item of Machinery Had a Cost

question 9

Multiple Choice

On 31 December 2019 an item of machinery had a cost of $300 000 and accumulated depreciation of $280 000. If the machinery was sold for a profit of $30 000 on 1 January 2020, how much was recorded as income from the proceeds of the sale?

• A) $20 000
• B) $50 000
• C) Nil
• D) $300 000

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Definitions:

Monopolistically Competitive Firm

A company that operates in a market with many competitors, each offering a differentiated product, allowing for some degree of price control.

Average Costs

Costs per unit of output, calculated by dividing the total cost of production by the number of units produced.

Profit-maximizing

The process or strategy of adjusting production and sales to achieve the highest possible profit margin.