Question

Suppose Ms. Smith sells her 2018 Honda Fit next year. The original cost of the

vehicle was $10,000. During the time she has owned the car she has taken $3,000 dollars
of deprecation on it. Ms. Williams sells the car for $9,000. What is result of the transaction?
A. An ordinary loss of $1,000
B. Long-term capital gain of $2,000
C. An ordinary gain of $2,000
D. An ordinary gain of $6,000

Answer 1

C

Step-by-step explanation:

Cost=10000

Accumulated depreciation=3000

Sales price=9000

Net value=10000-3000=7000

Gain=9000-7000=2000