Question

A company purchased a building for $850,000 on January 1, 2010. As of December 31, 2014, $200,000 of accumulated depreciation had been recorded related to this building. The building was sold to another party for $1,250,000 on January 1, 2015. On the sale of this building, the company should recognize:_______

a. A gain of $650,000
b. A loss of $650,000
c. A gain of $600,000
d. A loss of $600,000

Answer 1

On the sale of this building, the company should recognize:_______

c. A gain of $600,000

Step-by-step explanation:

a) Data and Calculations:

The cost for the Purchase of building on January 1, 2010 = $850,000

Accumulated depreciation as of December 31, 2014 = 200,000

Book value of building as of December 31, 2014 = $650,000

Sale proceeds on January 1, 2015 = $1,250,000

Gain from the sale of the building = $600,000