asset was purchased for $12,000. The asset's estimated useful life was 3 years and its residual value was $2,000. How much gain or loss is reported if the asset is sold for $3,000 at the end of the fourth year?

Question

Quizplus · Accepted Answer

The asset's depreciable amount is $12,000 - $2,000 = $10,000 over 3 years, so annual depreciation is $10,000 / 3 = $3,333.33. After 3 years, its book value is $12,000 - $10,000 = $2,000. Selling it for $3,000 results in a $1,000 gain.

Asset Was Purchased for $12,000