An asset was purchased for $31,000 on January 1, 2016
The asset's estimated useful life was five years, and its residual value was $8,000. The straight-line method of depreciation was used. Calculate the gain or loss if the asset is sold for $21,000 on December 31, 2016, the last day of the accounting period.
A) $2,700 gain
B) 5,400 loss
C) 5,400 gain
D) no gain or no loss
B .Market value of assets received $21,000
Cost $31,000
Less: Accumulated Depreciation* 4,600 (26,400 )
Gain or (Loss) -$5,400
*Accumulated Depreciation = ($31,000 - $8,000 ) / 5 = $4,600
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