Kovacic Company purchased a computer that cost $10,000. It had an estimated useful life of five years and residual value of $0. The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash. What should Kovacic record?
A) Neither a gain nor a loss-the computer was sold at its book value.
B) A loss of $1,000.
C) Neither a gain nor a loss-the gain that occurred in this case would not be recognized.
D) A gain of $1,000.

Question

Quizplus · Accepted Answer

The computer was sold for $3,000, which is $1,000 more than its book value of $2,000. Therefore, Kovacic should record a gain of $1,000.

Kovacic Company Purchased a Computer That Cost $10,000