Question

A company sells a plant asset that originally cost $564000 for $222000 on December 31, 2017. The accumulated depreciation account had a balance of $282000 after the current year's depreciation of $47000 had been recorded. The company should recognize a __________?

Answer 1

Answer:

The company should recognize a loss of $60,000

Explanation:

Data provided in the question:

Original cost = $564,000

Selling price = $222,000

Accumulated depreciation balance = $282,000

Current year's depreciation = $47000

Now,

The book value of the plant asset

= Original cost - Accumulated depreciation balance

= $564,000 - $282,000

= $282,000

therefore,

Gain = Selling price - Book value

= $222,000 - $282,000

= -$60,000

Here, the negative sign means loss

Therefore,

The company should recognize a loss of $60,000