An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record: Multiple Choice Neither a gain or loss is recognized on this type of transaction. A gain on sale of $2,000. A loss on sale of $1,000. A gain on sale of $1,000. A loss on sale of $2,000.
An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record: Multiple Choice Neither a gain or loss is recognized on this type of transaction. A gain on sale of $2,000. A loss on sale of $1,000. A gain on sale of $1,000. A loss on sale of $2,000.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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![An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the
asset is sold on July 1, Year 7 for $25,000, the company should record:
Multiple Choice
O
O
O
Neither a gain or loss is recognized on this type of transaction.
A gain on sale of $2,000.
A loss on sale of $1,000.
A gain on sale of $1,000.
A loss on sale of $2,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd68c1a7b-6b66-4c68-b2f1-650405855849%2Fd2ae96ec-e579-4a43-b93f-4c1d611a5e5c%2Fc8et495_processed.png&w=3840&q=75)
Transcribed Image Text:An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the
asset is sold on July 1, Year 7 for $25,000, the company should record:
Multiple Choice
O
O
O
Neither a gain or loss is recognized on this type of transaction.
A gain on sale of $2,000.
A loss on sale of $1,000.
A gain on sale of $1,000.
A loss on sale of $2,000.
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