Buffey operates a delivery service.She purchased a van in 2011 for $25,000,and she sold it in 2013 for $15,000.Buffey did not deduct any depreciation on the van from 2011 through 2013,although total allowable depreciation on the van would have been $17,000.What is the amount of Buffey 's recognized gain or loss on the sale of the van?
A)$10,000 loss
B)$ 7,000 gain
C)$ 8,000 gain
D)$15,000 gain
E)$17,000 gain

Question

Quizplus · Accepted Answer

The recognized gain is calculated as the selling price minus the adjusted basis. The adjusted basis is the original cost minus allowable depreciation. The original cost was $25,000, and allowable depreciation was $17,000, so the adjusted basis is $8,000. The selling price was $15,000, resulting in a gain of $7,000 ($15,000 - $8,000).

Buffey Operates a Delivery Service