CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

On June 28, 2015, a business sold a plant asset that cost $5,000 for $1,500. The asset had a 5-year service life, no salvage value, and had been used by the business since January 1, 2012. Straight-line depreciation was used. The fiscal year ends on December 31. What will be the result of selling the plant asset?
A. A $500 gain on the disposal of the plant asset
B. A $500 loss on the disposal of the plant asset
C. No gain or loss on the disposal of the plant asset
Explanation: The annual depreciation was $1,000 ($5,000 / 5). The book value on June 28 was $1,500 ($5,000 - ($1,000 X 3) - ($1,000 X 1/2)). The sales price was equal to the book value; there was no gain or loss.

User Contributed Comments 5

User Comment
awlhoaln must count half dep on jun 01?
najat For 2 days left, I guess you can count it as half a year
Mikehuynh Book value = selling price => record no gain/loss
dbalakos nice, thats why we got to pay attention!!
mali97 hate that u said fiscal year ends on Dec 31. I thought you dont count half the year because of that
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