Answered: The Bomb Pop Corporation sold ice cream…

The Bomb Pop Corporation sold ice cream equipment for $18,500. The equipment was originally purchased for $40,000, and depreciation through the date of sale totaled $25,000.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter14: Choice Of Business Entity—operations And Distributions

Section: Chapter Questions

Problem 35P

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.

Question

29 )

The Bomb Pop Corporation sold ice cream equipment for $18,500. The equipment was originally purchased for $40,000, and
depreciation through the date of sale totaled $25,000.
1. What was the gain or loss on the sale of the equipment?

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