Buffey operates a delivery service.She purchased a van in 2014 for $25,000,and she sold it in 2016 for $15,000.Buffey did not deduct any depreciation on the van from 2014 through 2016,although total allowable depreciation on the van would have been $17,000.What is the amount of Buffey 's recognized gain or loss on the sale of the van?
A)$10,000 loss
B)$7,000 gain
C)$8,000 gain
D)$15,000 gain
E)$17,000 gain

Question

Quizplus · Accepted Answer

The recognized gain is calculated as the selling price ($15,000) minus the adjusted basis. The adjusted basis is the original cost ($25,000) minus the allowable depreciation ($17,000), which equals $8,000. Therefore, the gain is $15,000 - $8,000 = $7,000.

Buffey Operates a Delivery Service