On January 1, 2011, James Company sold a machine for $10,000 that it had used for several years. The machine was purchased at $22,000, and had accumulated depreciation of $9,000 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine?
A) Gain of $10,000
B) Loss of $13,000
C) Loss of $3,000
D) Gain of $3,000

Question

Quizplus · Accepted Answer

The gain or loss can be calculated as:
Sale price - Book value
Sale price = $10,000
Book value = $22,000 - $9,000 = $13,000
Therefore, the loss on the sale of the machine is $10,000 - $13,000 = -$3,000 or a loss of $3,000.

On January 1, 2011, James Company Sold a Machine for $10,000