On November 4, 2018, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2018 and 2019, respectively, Blue deducted $642 and $5,128 of cost recovery. These amounts were incorrect; Blue applied the wrong percentages (i.e., those for 39-year rather than 27.5-year assets). Blue should have taken $910 and $7,272 cost recover in 2018 and 2019, respectively. On January 1, 2020, the asset was sold for $180,000. Calculate the gain or loss on the sale of the asset for that year.
On November 4, 2018, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2018 and 2019, respectively, Blue deducted $642 and $5,128 of cost recovery. These amounts were incorrect; Blue applied the wrong percentages (i.e., those for 39-year rather than 27.5-year assets). Blue should have taken $910 and $7,272 cost recover in 2018 and 2019, respectively. On January 1, 2020, the asset was sold for $180,000. Calculate the gain or loss on the sale of the asset for that year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(LO. 1, 2 Federal
On January 1, 2020, the asset was sold for $180,000. Calculate the gain or loss on the sale of the asset for that year.
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