An Asset's Carrying Amount Is $36,000 on January 1, Year

question 40

Multiple Choice

An asset's carrying amount is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record:

• A) Neither a gain or loss is recognized on this type of transaction.
• B) A gain on sale of $2,000.
• C) A loss on sale of $1,000.
• D) A gain on sale of $1,000.
• E) A loss on sale of $2,000.

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