Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions on the machine through the date of the sale. What is Leesburg's gain or loss realized on the machine?
A) $800 gain.
B) $1,000 gain.
C) $1,200 loss.
D) $1,400 loss.
E) None of these.

Question

Quizplus · Accepted Answer

Leesburg's gain or loss is calculated by subtracting the adjusted basis from the sale price. The adjusted basis is the original purchase price minus depreciation: $2,600 - $1,200 = $1,400. The sale price is $2,200. Therefore, the gain is $2,200 - $1,400 = $800.

Leesburg Sold a Machine for $2,200 on November 10th of the Current