An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset's adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?
A)$5,000
B)$10,000
C)$20,000
D)$30,000
E)None of these

Question

Quizplus · Accepted Answer

The adjusted basis of the asset is the original basis minus the depreciation claimed, so $25,000 - $20,000 = $5,000. Since the question states that the adjusted basis is $15,000, we can calculate that $15,000 - $5,000 = $10,000 worth of capital improvements have been made. Therefore, the answer is B) $10,000.

An Asset Has an Original Basis of $25,000 and Depreciation