Loma Linda,Inc.sells a long-lived asset that originally cost $400,000 for $100,000 on December 31,2018.The Accumulated Depreciation account had a balance of $220,000 after the current year's depreciation of $90,000 had been recorded.The company should recognize a:
A)$200,000 loss on sale.
B)$80,000 gain on sale.
C)$80,000 loss on sale.
D)$50,000 loss on sale.

Question

Quizplus · Accepted Answer

Gain (loss)on disposal = Proceeds from sale − Book value at time of sale
Gain (loss)on disposal = Proceeds from sale − (Cost − Accumulated depreciation at time of sale)
= $100,000 − ($400,000 − $220,000)= ($80,000)