Calculate the gain or loss on the sale of the asset

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On Nov. 4, 2005, Blue company acquired an asset (27.5 year residential real property) for $100,000 for use in its business. In 2005 and 2006, respectively, Blue took $321 and $2,564 of cost recovery. These amounts were incorrect because Blue applied the wrong percentages (i.e. those for 39years rather than 27.5year). Blue should have taken $455 and $3,636 cost recovery in 2005 and 2006. On January 1, 2007, the asset was sold for $98,000. Calculate the gain or loss on the sale of the asset in 2007.

Reference no: EM13257596

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