A) capital
B) capital-gain
C) capitalism
D) None of the above
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The correct answer is B) capital-gain
When you sell an asset for more than the price at which it was bought, you have made a profit which is referred to as a capital gain. This is an increase in your capital asset’s value and is realized when the asset is sold. When the sale of an asset results in money that is greater than the purchase price, a gain has been made.
The carrying amount is the purchase price and when an asset is disposed of for something of higher value, a gain is recorded. Gross profit is calculated by subtracting the cost of goods sold from the sales revenue, and you have a capital gain if you sell the asset for more than your adjusted basis.