An 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 $1,000 at the beginning for the fourth year?

Question

Quizplus · Accepted Answer

The asset was sold for $1,000, which is less than its book value of $2,000 ($12,000 cost - $11,000 accumulated depreciation). Therefore, a loss of $1,000 is reported.

An Asset Was Purchased for $12,000