Question

Sumner sold equipment that it uses in its business for $30,000. Sumner bought the equipment a few years ago for $80,000 and has claimed $40,000 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss?

Answer 1

Answer:

long-term capital loss 10,000

Explanation:

80,000 purchase

(40,000) accumulate depreciation

40,000 net book value

30,000 sales price

-10,000 loss

This is a long-term capital loss because the assets was in the company possesions for a longer time than 12 months.