ABC 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 second year of use for $5,000 cash. ABC should record: A) neither a gain nor a loss - the gain that occurred, in this case, would not be recognized. B) a gain of $1,000. C) a loss of $1,000. D) neither a gain nor a loss - the computer was sold at its book value.

SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter11: Investor Losses
Section: Chapter Questions
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ABC 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 second year of use for $5,000 cash. ABC
should record:
A) neither a gain nor a loss - the gain that
occurred, in this case, would not be recognized.
B) a gain of $1,000.
C) a loss of $1,000.
D) neither a gain nor a loss - the computer was
sold at its book value.
Transcribed Image Text:ABC 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 second year of use for $5,000 cash. ABC should record: A) neither a gain nor a loss - the gain that occurred, in this case, would not be recognized. B) a gain of $1,000. C) a loss of $1,000. D) neither a gain nor a loss - the computer was sold at its book value.
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