Abbott Company purchased a computer that cost $10,000.It had an estimated useful life of 5 years and no residual value.The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash.Abbott should record:
A)a gain of $1,000.
B)a loss of $1,000.
C)neither a gain nor a loss - the computer was sold at its book value.

Question

Quizplus · Accepted Answer

The computer depreciates $2,000 per year ($10,000 cost / 5 years). After 4 years, it has depreciated $8,000, leaving a book value of $2,000 ($10,000 - $8,000). Selling it for $3,000 results in a $1,000 gain ($3,000 - $2,000).

Abbott Company Purchased a Computer That Cost $10,000