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Question(s) / Instruction(s):

An asset\'s book value is $40,000 on January 1, 2007. The asset is being depreciated at a rate of $500 per month on the straight-line method. Assuming the asset is sold on July 1, 2008 for $28,000, the company should record:

a.            A gain on sale of $3,000.

b.            A gain on sale of $6,000

c.             Neither a gain or loss is recognized on this type of transaction.

d.            A loss on sale of $3,000.

e.            A loss on sale of $6,000.

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