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14 April, 12:20

Joan bought a business machine for $15,000 on January 1, 2013, and later sold the machine for $12,800 when the total allowable depreciation is $8,500. The depreciation actually taken on the tax returns totaled $8,000. Joan must recognize a gain or loss ofA. no gain or lossB. $6,800C. ($3,200) D. $6,300

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  1. 14 April, 12:24
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    The correct answer is option D.

    Explanation:

    Joan bought a business machine for $15,000.

    She sold it for $12,800.

    The total allowable depreciation is $8,500.

    The depreciation actually taken on the tax returns totaled $8,000.

    The book value of machine

    = Original value - Allowable depreciation

    = $15,000 - $8,500

    = $6,500

    Gain to Joan

    = Selling price of machine - Book value of machine

    = $12,800 - $6,500

    = $6,300
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