Buffey operates a delivery service. She purchased a van in 2016 for $25,000, and she sold it in 2018 for $15,000. Buffey did not deduct any depreciation on the van from 2016 through 2018, 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

Buffey's recognized gain is calculated by subtracting the adjusted basis of the van from the sale price. The adjusted basis is the original cost minus any allowable depreciation, which is $25,000 - $17,000 = $8,000. Selling the van for $15,000 results in a $7,000 gain ($15,000 - $8,000).

Buffey Operates a Delivery Service