Question

Carmen Company has an asset that cost $5,000 and currently has accumulated depreciation of $2,000. Suppose the firm sold the asset for $2,500 and is subject to a 30% income tax rate. The loss on disposal would be: $500. $350. $2,500. None, because the transaction produced a gain. $650.

Answer 1

The loss on disposal would be: $500

Step-by-step explanation:

The computation is shown below;

= Cost of the asset - accumulate depreciation - sale value

= $5,000 - $2,000 - $2,500

= $500

This $500 represent the short term capital loss

So the $500 would be loss on disposal

Hence, the first option is correct

And, the same is relevant