On December 31, 2018, Cee Corp. sells an asset that originally cost $300,000 for $75,000. The company recognized a loss on disposal of $25,000. What was the balance of the accumulated depreciation account after the current year's depreciation of $15,000 was recorded?
A) $ 25,000 gain
B) $ 25,000 loss
C) $125,000 gain
D) $125,000 loss

Question

Quizplus · Accepted Answer

The loss on disposal is calculated as the difference between the asset's book value and the sale price. The book value is the original cost minus accumulated depreciation. Given the loss of $25,000, the accumulated depreciation must have been $200,000 ($300,000 - $75,000 - $25,000).