Final answer:
The lodging business sold an SUV for $10,000 that had a book value of $7,500 after 3 years of depreciation. Since the sale price exceeds the depreciated value, the business made a gain of $2,500 on the sale.
Step-by-step explanation:
The student's question is concerned with evaluating whether a lodging business has made a profit or a loss on the sale of a luxury SUV. Depreciation is the reduction in the value of an asset over time. In this case, the SUV's annual depreciation is $7,500. Assuming linear depreciation, over 3 years, the total depreciation would be 3 years × $7,500/year = $22,500. Therefore, the book value of the SUV before it was sold would be the original price minus accumulated depreciation: $30,000 - $22,500 = $7,500.
Given that the SUV is sold for $10,000, this is higher than the adjusted book value after depreciation. Thus, the lodging business has realized a gain from the sale amounting to the sale price minus the book value: $10,000 - $7,500 = $2,500.