An asset was acquired on January 1, 2018, for $15,000 with an estimated 4-year life and $1,000 residual value. The company uses straight-line depreciation. Calculate the gain or loss if the asset was sold on December 31, 2020, for $5,000.
A) $500 gain.
B) $3,000 loss.
C) $1,500 gain.
D) $500 loss.

Question

Quizplus · Accepted Answer

Depreciation = ($15,000 ? $1,000)/4 years = $3,500/year.
Accumulated depreciation = $3,500 × 3 years = $10,500.
Book value = $15,000 - $10,500 = $4,500.
Gain = $5,000 - $4,500 = $500.

An Asset Was Acquired on January 1, 2018, for $15,000