Lori Company sold an operational asset, a machine, for cash. It originally cost $20,000. The accumulated depreciation at the date of disposal was $15,000. A gain on the disposal of $2,000 was reported. What was the cash inflow from this transaction?
A) $4,000.
B) $3,000.
C) $5,000.
D) $7,000.

Question

Quizplus · Accepted Answer

The book value of the machine at the time of sale was $5,000 ($20,000 cost - $15,000 accumulated depreciation). With a reported gain of $2,000, the cash inflow from the sale was $7,000 ($5,000 book value + $2,000 gain).

Lori Company Sold an Operational Asset, a Machine, for Cash