When a depreciable asset is sold, a tax gain or tax loss on disposal is calculated, based on the book value of the asset at the time of disposal. If a ________ has occurred, a ________ is recorded

A) gain, tax credit
B) gain, tax reduction
C) loss, tax credit
D) loss, tax increase

Answer: C
Explanation: C) When a depreciable asset is sold, a tax gain or tax loss on disposal is calculated, based on the book value of the asset at the time of disposal. If a gain has occurred, taxes are incurred. If a loss has occurred, a tax credit or tax reduction is recorded.