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Carmen Company has an asset that cost $5,000 and currently has accumulated depreciation of $2,000. Suppose the firm sold the asset for $2,500 and is subject to a 30% income tax rate.
-The loss on disposal would be:

Question

Quizplus · Accepted Answer

The book value of the asset is calculated as the cost minus accumulated depreciation, which is $5,000 - $2,000 = $3,000. Selling the asset for $2,500 results in a loss of $3,000 - $2,500 = $500.

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