Refer to the information above. In the year 2015, Tilton Products sells this machinery for $4,500. At the date of sale, the machinery had been depreciated by Tilton Products to its estimated residual value of $8,000. This sale results in:
A) A $3,500 loss in both the company's financial statements and income tax return.
B) No gain or loss in either the financial statements or income tax return.
C) A $3,500 loss in the financial statements, a $3,500 gain in the income tax return.
D) A $3,500 loss in the financial statements, but no gain or loss in the income tax return.

Question

Quizplus · Accepted Answer

The machinery was sold for $4,500, but its book value was $8,000 (residual value). This results in a $3,500 loss ($8,000 - $4,500) in both the financial statements and the income tax return.

Refer to the Information Above