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)A gain of $1,000.
B)A loss of $1,000.
C)Neither a gain nor a loss-the computer was sold at its book value.
D)Neither a gain nor a loss-the gain that occurred in this case would not be recognized.

Question

Quizplus · Accepted Answer

The computer's annual depreciation is $2,000 ($10,000/5 years). After four years, accumulated depreciation is $8,000, making the book value $2,000 ($10,000 - $8,000). Selling it for $3,000 results in a $1,000 gain ($3,000 - $2,000).

Kovacic Company Purchased a Computer That Cost $10,000