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20 November, 06:15

A fixed asset with a cost of $30,000 and accumulated depreciation of $27,500 is sold for $3,500. What is the amount of the gain or loss on the disposal of the fixed asset?

A. $3,500 gain

B. $1,000 gain

C. $1,000 loss

D. $2,500 loss

C. $3,500 loss

D. $2,500 gain

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Answers (1)
  1. 20 November, 06:28
    0
    The correct answer is B that is gain of $1,000

    Explanation:

    The amount of gain or loss on the disposal of the fixed assets is computed as:

    Amount of loss or gain = (Selling Price + Accumulated depreciation) - Cost of fixed assets

    where

    Selling Price is $27,500

    Accumulated depreciation is $3,500

    Cost of fixed assets is $30,000

    Putting the values above:

    = ($27,500 + $3,500) - $30,000

    = $31,000 - $30,000

    = $1,000

    It is a gain of $1,000 on disposal of the fixed assets.
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