assignment content\npage 6 of 20\nquestion 6\na fixed asset with a cost of $41,000 and accumulated…

assignment content\npage 6 of 20\nquestion 6\na fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000. assuming a trade - in allowance of $3,000, the recognized loss on the trade is\na $ (3,000)\nb $ (4,500)\nc $ (500)\nd $ (1,500)

assignment content\npage 6 of 20\nquestion 6\na fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000. assuming a trade - in allowance of $3,000, the recognized loss on the trade is\na $ (3,000)\nb $ (4,500)\nc $ (500)\nd $ (1,500)

Answer

Explanation:

Step1: Calculate the book value of the old asset

The book value of an asset is calculated as ( \text{Cost}-\text{Accumulated Depreciation} ). [ \begin{align*} \text{Book Value}&=$41,000 - $36,500\ &=$4,500 \end{align*} ]

Step2: Calculate the recognized loss

The recognized loss on the trade is calculated as ( \text{Book Value}-\text{Trade - in Allowance} ) [ \begin{align*} \text{Recognized Loss}&=$4,500-$3,000\ &=$1,500 \end{align*} ]

Answer:

D. ($1,500)