Question

A business machine purchased April 10, 2017, for $98,000. On August 15, 2019, the machine was...

A business machine purchased April 10, 2017, for $98,000. On August 15, 2019, the machine was fully deprecated and sold for $67,000.

  1. What is the amount of the gain or loss from the sale of the machine?
  2. What is the nature/character of the gain or loss from the sale of the machine?
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Answer #1

a. Since the machinery was fully depriciated along the time of usage, and the machinery was then sold for $67000.

It's a gain of $67000 because the current value of machinery has reduced to $0.

b. It's a short term capital gain. As per the accounting& income tax rule any profit arrising out of assets on which depriciation has been applied is subject to be treated as short term capital gain.

Such gains are posted in income statement under the head non operating income.

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