The following information is available for an asset that is classified as held for sale: Accumulated depreciation (at March 31, 2020)..........................$24,3000
Acrat cost......................................................................................50,000
If the asset were sold on April 1, 2020 for $27,600, there would be
A) a loss of $1,900.
B) a gain of $1,400.
C) a gain of $1,900.
D) a loss of $22,400.

Question

The following information is available for an asset that is classified as held for sale: Accumulated depreciation (at March 31, 2020)..........................$24,3000
Acrat cost......................................................................................50,000
 If the asset were sold on April 1, 2020 for $27,600, there would be
A) a loss of $1,900.
B) a gain of $1,400.
C) a gain of $1,900.
D) a loss of $22,400.

Quizplus · Accepted Answer

The carrying value (book value) of the asset is calculated as follows: 
Cost - Accumulated Depreciation = $50,000 - $24,300 = $25,700

Since the asset sold for $27,600, there is a gain on the sale of $1,900 ($27,600 - $25,700 = $1,900). Therefore, the correct answer is C, a gain of $1,900.

The Following Information Is Available for an Asset That Is