Answer:
transaction would be a profit of $ 2,000.
Step-by-step explanation:
Given:-
- The original cost of the vehicle, C = $ 10,000
- The depreciation of the vehicle until the time of selling, d = $3,000
- The price at which the vehicle is sold, S = $ 9,000
Find:-
What is result of the transaction
Solution:-
- Whenever an asset is bought the value of the asset depreciates. There are several tools and methods to estimate the amount of depreciation.
- After n years of possession of car / since manufactured the asset undergoes depreciation until its sold or salvaged.
- Here Ms Smith possessed her car for a certain amount of time t years.
- The accumulated depreciation at the time she sold her car was " d ".
- So at the point of selling her car the actual worth or value of her car was ( C* ):
C* = C - d
C* = $10,000 - $3,000
C* = $7,000
- Now her car's value is ( C* ). If she sells her for " S " higher than current asset worth then she will profit from it otherwise she would sustain a loss in her selling transaction. So the net asset worth she would have after selling her car would be:
Net Worth = S - C*
Net Worth = $9,000 - $ 7,000
Net Worth = $ 2,000
Answer: The net worth is a positive value that means she sold her car for higher value than its worth; hence, the transaction would be a profit of $ 2,000.
