When a depreciable asset is ultimately sold,the sales price is:
A) fully taxable.
B) nontaxable.
C) nontaxable only if accelerated depreciation was used.
D) taxable to the extent that the sales price exceeds book value.

Question

Quizplus · Accepted Answer

The sales price of a depreciable asset is taxable to the extent that it exceeds the asset's book value (the remaining undepreciated cost). This is because the full amount of depreciation taken throughout the life of the asset reduces the original cost (basis) of the asset, so when it is sold, only the portion of the sales price that exceeds the remaining undepreciated cost is considered a gain and therefore taxable.

When a Depreciable Asset Is Ultimately Sold,the Sales Price Is