QUESTION 13 A capital gain is realized: O For the amount up to the original cost

Question

QUESTION 13 A capital gain is realized: O For the amount up to the original cost basis when an asset is sold for more than its current book value When more than the asset's original cost basis is received for the asset at the time when an asset is sold When less than the book value is received for a depreciated asset O For the cash received for an asset at the time of asset disposal (eg sale, salvage, scrapped) QUESTION 14 Which of the following assets generally do not depreciate? Buildings and Structures Land Equipment used to build capital improvements OOffice supplies

Explanation / Answer

13. When more than the asset's original cost basis is received for the asset at the time when an asset is sold.

Capital gain = Sales price - Purchase price

So, when sale price is greater than the purchase price of product then seller will have capital gain.

14. Land

Land does not depreciate. Buildings, equipments, office supplies are items which get depreciated with the time due to wear and tear.

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