Another homework question.
An asset's book value is $18,000 on June 30, 2007. The asset is being depreciated at an annual
rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, 2008 for
$15,000, the company should record:
A loss on sale of $1,500.
A gain on sale of $1,500.
Neither a gain nor a loss is recognized on this type of transaction.
A gain on sale of $3,000.
A loss on sale of $3,000.
I believe the correct answer is the second-gain on sale of $1500 because there has only been a 6 month period to account for the depreciation so it is $1500 vice $3000.
Am I looking at this correctly?
Thanks