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25 September, 09:55

Lena is a sole proprietor. In April of this year, she sold equipment purchased four years ago for $26,000 with an adjusted basis of $15,500 for $17,000. Later in the year, Lena sold another piece of equipment purchased two years ago with an adjusted basis of $8,200 for $5,500. What is the amount and character of Lena's gain or loss?

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  1. 25 September, 12:58
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    Answer and Explanation:

    Given:

    Purchase price = $26,000

    New adjusted Price = $15,500

    Sales Price = $17,000

    Profit = sales price - new adjusted price

    = $17,000 - $15,500

    Profit = $1,500

    This type of gain always counts as revenue gain for the organization, In this situation, the Purchase price of the equipment is higher than the adjusted value.

    In second situation she get loss of $2,700 ($8200 - $5,500)
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