An asset that costs $28,800 and has accumulated depreciation of $6,000 is sold for $21,600.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

The formula for calculating gain or loss on the sale of an asset is:
Sale price - Book value (cost - accumulated depreciation)
In this case, the book value is:
$28,800 (cost) - $6,000 (accumulated depreciation) = $22,800
So the gain or loss is:
$21,600 (sale price) - $22,800 (book value) = -$1,200 (loss)

An Asset That Costs $28,800 and Has Accumulated Depreciation of $6,000