Care Foundation is a voluntary health and welfare organization funded by contributions from the general public.Care sold equipment for $30,000 which cost $40,000 and had a book value of $25,000 at the time of sale.In recording the sale,Care should:

Question

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When an asset is sold for more than its book value (cost less accumulated depreciation), a gain is realized. In this case, the equipment had a book value of $25,000, but was sold for $30,000, resulting in a gain of $5,000. Therefore, Care should record a gain of $5,000 in the accounting records. Choice A is incorrect because "temporarily restricted revenue" would only be applicable if the donor had specified restrictions on the use of the funds. Choice C is incorrect because a loss would only occur if the asset was sold for less than its book value. Choice D is incorrect because an accounting record must be made to account for the sale.

Care Foundation Is a Voluntary Health and Welfare Organization Funded