Joan bought a business machine for $15,000 on January 1, 2013, and later sold the machine for $12,800 when the total allowable depreciation is $8,500. The depreciation actually taken on the tax returns totaled $8,000. Joan must recognize a gain or loss ofA. no gain or lossB. $6,800C. ($3,200) D. $6,300

Question

Business

Tessa Costa

21 February, 06:37

Joan bought a business machine for $15,000 on January 1, 2013, and later sold the machine for $12,800 when the total allowable depreciation is $8,500. The depreciation actually taken on the tax returns totaled $8,000. Joan must recognize a gain or loss ofA. no gain or lossB. $6,800C. ($3,200) D. $6,300

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Answers (1)

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Courtney Buchanan · Answer 1

The correct answer is option D.

Explanation:

Joan bought a business machine for $15,000.

She sold it for $12,800.

The total allowable depreciation is $8,500.

The depreciation actually taken on the tax returns totaled $8,000.

The book value of machine

= Original value - Allowable depreciation

= $15,000 - $8,500

= $6,500

Gain to Joan

= Selling price of machine - Book value of machine

= $12,800 - $6,500

= $6,300