Crane Company purchased machinery for $786000 on January 1, 2019. Accumulated Depreciation was $686000 on December 31, 2025. The machinery was sold on January 1, 2026 for $82000. What gain or loss did Crane record from the sale of the machinery? $82000 loss $18000 loss $82000 gain $18000 gain

Crane Company purchased machinery for $786000 on January 1, 2019. Accumulated Depreciation was $686000 on December 31, 2025. The machinery was sold on January 1, 2026 for $82000. What gain or loss did Crane record from the sale of the machinery? $82000 loss $18000 loss $82000 gain $18000 gain

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 11MCQ

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Crane Company purchased machinery for $786000 on January 1, 2019. Accumulated Depreciation was $686000 on
December 31, 2025. The machinery was sold on January 1, 2026 for $82000. What gain or loss did Crane record from the
sale of the machinery?
$82000 loss
$18000 loss
$82000 gain
$18000 gain

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