8.9k views
3 votes
A lodging business sells one of its luxury SUVs for $ 6,000. This car was bought 3 years ago for $30,000. The depreciation is $7,500 per year. Based on this, the lodging business has made a:________.

1 Answer

0 votes

Final answer:

The lodging business made a loss of $1,500 by selling a luxury SUV that depreciated more than its selling price over 3 years.

Step-by-step explanation:

The student is asking about the financial outcome for a business that sold a vehicle, which has depreciated in value over a period of 3 years. To calculate whether the business made a profit or loss, we can use the information provided: the original purchase price was $30,000, it depreciates at $7,500 per year, and it was sold for $6,000 after 3 years.

To find the total depreciation, multiply the annual depreciation by the number of years: $7,500 x 3 = $22,500. Subsequently, subtract the total depreciation from the original purchase price to get the book value: $30,000 - $22,500 = $7,500. The car was sold for $6,000, which is less than the book value after depreciation, indicating the business incurred a loss, not a profit.

The lodging business has made a loss of $1,500 on the sale of the luxury SUV.

User RockNinja
by
8.3k points