Question

Ngu owns equipment that cost $93,500 with accumulated depreciation of $64,000. Ngu asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.

Answer 1

Answer:

Gain= $3,500

Explanation:

First, we need to calculate the book value at the moment of the sale:

Book value= Purchase price - accumulated depreciation

Book value= 93,500 - 64,000

Book value= $29,500

Now, the gain or loss by the sale:

Gain/loss= selling price - book value

Gain/loss= 33,000 - 29,500

Gain= $3,500