Greg sold some equipment for $72,510 on June 13,2014.Greg had originally purchased the equipment for $86,750 on November 21,2013.The equipment was subject to depreciation of $17,350.What gain or loss will Greg recognize on the sale?

Question

Quizplus · Accepted Answer

The gain or loss is calculated as the sale price minus the adjusted basis (original cost minus depreciation). The adjusted basis is $86,750 - $17,350 = $69,400. The gain is $72,510 - $69,400 = $3,110, which is an ordinary gain since the equipment was held for less than a year.

Greg Sold Some Equipment for $72,510 on June 13,2014