A capital loss is computed byA) subtracting the original cost of an investment from the proceeds received from the sale of that investment minus any income from the investment. B) subtracting the original cost of an investment from the proceeds received from the sale of that investment plus any income from the investment. C) subtracting the proceeds received from the sale of an investment from the original cost of the investment. D) subtracting the original cost of an investment from the proceeds received from the sale of that investment.

Question

Alexa Freeman

Business

29 April, 14:57

A capital loss is computed byA) subtracting the original cost of an investment from the proceeds received from the sale of that investment minus any income from the investment. B) subtracting the original cost of an investment from the proceeds received from the sale of that investment plus any income from the investment. C) subtracting the proceeds received from the sale of an investment from the original cost of the investment. D) subtracting the original cost of an investment from the proceeds received from the sale of that investment.

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Madalyn Wells · Answer 1

C) subtracting the proceeds received from the sale of an investment from the original cost of the investment.

Explanation:

Capital loss arises on sale of an asset, or its disposition, or permanent fall in value.

Capital loss = Original cost (Purchase Price) - Selling Price

If this value is positive it is termed as capital loss, else it is termed as capital gain. Whenever we calculate any gain or loss then sale value shall be deducted from cost and not the cost from selling price.

Therefore, correct option is

C) subtracting the proceeds received from the sale of an investment from the original cost of the investment