Question

Bull Run sold a computer for $1,200 on November 10th of the current year. The computer was purchased for $2,800. Bull Run had taken $1,000 of depreciation deductions. What is Bull Run's gain or loss realized on the computer?

Answer 1

Bull Run realized a loss of $600 on the sale of the computer, calculated by subtracting the sale price of $1,200 from the book value of $1,800.

Step-by-step explanation:

To calculate Bull Run's gain or loss on the computer, you need to determine the book value of the asset at the time of sale and compare it to the sale price. The book value is the initial cost of the computer minus accumulated depreciation. In this case, the computer was purchased for $2,800 and Bull Run had taken $1,000 in depreciation deductions. Therefore, the book value at the time of sale was $2,800 - $1,000 = $1,800.

Gain or loss is calculated as the sale price minus the book value. Here, the computer was sold for $1,200. So, Bull Run realized a loss of $1,800 (book value) - $1,200 (sale price) = $600.