Greg sold some equipment for $72,510 on June 13, 2015. Greg had originally purchased the equipment for $86,750 on November 21, 2014. The equipment was subject to depreciation of $17,350. What gain or loss will Greg recognize on the sale?

Question

Quizplus · Accepted Answer

The gain or loss is calculated as the selling price minus the adjusted basis (original cost minus depreciation). The adjusted basis is $86,750 - $17,350 = $69,400. The gain is $72,510 - $69,400 = $3,110. Since the equipment is a business asset, the gain is considered ordinary.

Greg Sold Some Equipment for $72,510 on June 13, 2015