Answer:
b. $3,000 loss
Explanation:
For computing the gain or loss, first we have to determine the depreciation expense so that we can find the book value of an asset
So, under the straight-line method, the depreciation expense would be
= (Original cost - residual value) ÷ (useful life)
= ($15,000 - $1,000) ÷ (4 years)
= ($14,000) ÷ (4 years)
= $3,500
For two years, the depreciation would be
= $3,500 × 2 years
= $7,000
In this method, the depreciation is same for all the remaining useful life
Now the book value would be
= Acquired value of an asset - accumulated depreciation
= $15,000 - $7,000
= $8,000
So, the gain would be
= Sale value - book value
= $5,000 - $8,000
= $3,000 loss
