On January 2, 2013, Hannah Company sold a machine for $1,000 that it had used for several years.The machine cost $12,000, and had accumulated depreciation of $9,000 at the time of sale.What gain or loss will be reported on the income statement for the sale of the machine?

Question

Quizplus · Accepted Answer

The gain or loss is calculated as the selling price minus the book value of the asset. The book value is the cost minus the accumulated depreciation. In this case, the book value of the machine is $3,000 ($12,000 - $9,000). Therefore, the loss on the sale of the machine is $2,000 ($1,000 - $3,000). So, the correct answer is C: Loss of $2,000.

On January 2, 2013, Hannah Company Sold a Machine for $1,000