Question

Motor Sales sold its old office furniture for $ 5,500. The original cost was $ 15,000​, and at the time of​ sale, accumulated depreciation was $ 12,000. What is the effect of this​ transaction?

Answer 1

Answer:

The effect of this transaction is a gain of $2,500 on disposal.

Explanation:

Cost of motor = $15000

Accumulated depreciation = $12000

Net book or carrying value = 15000 - 12000

                                             = $3,000

Income from disposal = $5,500

Gain/(loss) on disposal = $5,500 - $3,000

                                      = $2,500

The effect of this transaction is a gain of $2,500 on disposal.