In the year 2023,Tilton Products sells this machinery for $4,500.At the date of sale,the machinery had been depreciated by Tilton Products to its estimated residual value of $8,000.This sale results in:
A)A $3,500 loss in both the company's financial statements and its income tax return.
B)No gain or loss in either the financial statements or the income tax return.
C)A $3,500 loss in the financial statements;a $3,500 gain in the income tax return.
D)A $3,500 loss in the financial statements,but no gain or loss in the income tax return.

Question

Quizplus · Accepted Answer

DThe machinery was sold for $4,500 but had been depreciated to an estimated residual value of $8,000. This means Tilton Products recognized a loss of $3,500 ($8,000 - $4,500) on the sale in its financial statements. However, the tax implications could vary based on specific tax regulations and how the depreciation was handled for tax purposes, making both A and D potentially correct without more context. Generally, for financial reporting, the loss is recognized, but tax treatment can differ, hence the inclusion of both A and D as correct answers due to the lack of specific tax context provided.

In the Year 2023,Tilton Products Sells This Machinery for $4,500