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Equipment can be sold for $10,000 with a 2% commission payable on the sale. What is the income from selling?
A$10,000
B$9,600
C$9,700
D$9,800
Answer & Solution
Correct answer: D. $9,800
1. Sale proceeds are $10,000.
2. Commission is 2% of $10,000, which is $200.
3. Income under the sale option is $10,000 minus $200, which is $9,800.
4. Book value of $15,000 reflects past spending, so it stays out of the comparison.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 9.4 Lease or Sell Equipment_
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