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On August 1 of year 0, Jack purchased a machine for $22,000 to use in...

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Accounting

On August 1 of year 0, Jack purchased a machine for $22,000 to use in its business. On December 4 of year 0, Jack sold the machine for $20,000.

What are the amount and character of the gain or loss? Explain and show the calculation.

Jack depreciated the machinery using MACRS (seven-year recovery period). What are the amount and character of the gain or loss Jack will recognize on the sale if the machine was sold on January 15 of year one instead?

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