Question

Ngu owns equipment that cost $95,300 with accumulated depreciation of $65,200. Ngu asks $35,450 for the equipment but sells the equipment for $33,300. Compute the amount of gain or loss on the sale.

Answer 1

The amount of Gain on the sale is 3200.

First, subtract the equipment cost with accumulated depreciation which will give Book Value then subtract the Book value with the amount at which the equipment is sold if the selling price is more than book value then Gain on sale, if the selling price is less than Book value than Loss on sale.

• Machine cost (95300)
• Less:Depreciation (65200)
• Book Value (30100)
• Selling price (33300)
• Gain on Sale (3200)

Depreciation includes the amortization of assets whose useful life is predetermined. Depreciation is allocated to be able to rate a fair proportion of the depreciable amount in every accounting duration during the anticipated useful existence of the asset.

A gain on the sale of assets arises when an asset is sold for greater than its carrying amount. The carrying amount is the purchase fee of the asset, minus any subsequent depreciation and impairment prices. The benefit is assessed as a non-operating object on the income assertion of the selling entity.

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