An asset which costs $18,800 and has accumulated depreciation of $6,000 is sold for $11,600.What amount of gain or loss will be recognized when the asset is sold?
A)A gain of $1,200.
B)A loss of $1,200.
C)A loss of $7,200.
D)A gain of $7,200.

Question

Quizplus · Accepted Answer

To calculate the gain or loss, we need to compare the book value (cost - accumulated depreciation) with the amount for which it is sold. 
Book value = $18,800 - $6,000 = $12,800 
Amount sold for = $11,600

Since the amount sold for is less than the book value, there is a loss. 
Loss = Book value - Amount sold for 
Loss = $12,800 - $11,600 
Loss = $1,200 
Therefore, the answer is B, a loss of $1,200.

An Asset Which Costs $18,800 and Has Accumulated Depreciation of $6,000