Answer:
gain on sale of property = $330,000
so correct option is E) $330,000
Explanation:
given data
sale price = $400,000
existing mortgage = $150,000
property cost = $250,000
improvements = $50,000
Depreciation = $100,000
selling expenses = $20,000
to find out
the amount of gain realized
solution
we find first net sale price that is
net sale price = sale price + existing mortgage - selling expenses ..........1
put here value we get
net sale price = $400,000 + $150,000 - $20,000
net sale price = $530,000
and
net book value of property is
net book value = property cost + improvements - Depreciation ..........2
put here value we get
net book value = $250,000 + $50,000 - $100,000
net book value = $200,000
so
gain on sale of property is
gain on sale of property = net sale price - net book value of property ..........3
put here value we get
gain on sale of property = $530,000 - $200,000
gain on sale of property = $330,000
so correct option is E) $330,000
