0. Orton Corporation, which has a calendar year accounting period, purchased a newmachine for $40,000 on April 1, 2006. At that time Orton expected to use themachine for nine years and then sell it for $4,000. The machine was sold for$22,000 on Sept. 30, 2011. Assuming straight-line depreciation, no depreciationin the year of acquisition, and a full year of depreciation in the year of retirement,the gain to be recognized at the time of sale would bea. $4,000.b. $3,000.c. $2,000.d. $0.
0. Orton Corporation, which has a calendar year accounting period, purchased a newmachine for $40,000 on April 1, 2006. At that time Orton expected to use themachine for nine years and then sell it for $4,000. The machine was sold for$22,000 on Sept. 30, 2011. Assuming straight-line depreciation, no depreciationin the year of acquisition, and a full year of depreciation in the year of retirement,the gain to be recognized at the time of sale would bea. $4,000.b. $3,000.c. $2,000.d. $0.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
0. Orton Corporation, which has a calendar year accounting period, purchased a new
machine for $40,000 on April 1, 2006. At that time Orton expected to use the
machine for nine years and then sell it for $4,000. The machine was sold for
$22,000 on Sept. 30, 2011. Assuming straight-line
in the year of acquisition, and a full year of depreciation in the year of retirement,
the gain to be recognized at the time of sale would be
a. $4,000.
b. $3,000.
c. $2,000.
d. $0.
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