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Semmy [17]
3 years ago
9

On December 31, 2019, Hamilton Inc. sold a used industrial crane for $600,000 cash. The original cost of the crane was $5.0 mill

ion and its accumulated depreciation equaled $4.2 million on December 31, 2019. What is the gain or loss from the December 31, 2019 equipment sale?
Business
1 answer:
erastovalidia [21]3 years ago
5 0

Answer:

Loss of $200,000

Explanation:

Cost of Crane:                            $5,000,000

Accumulated Depreciation:         4,200,000

Difference                                         800,000

Sale of Crane                                    600,000

LOSS                                                  200,000

This would be a loss because Hamilton did not receive enough cash on the sale of the crane to cover its initial cost for the crane. Since we do not have a salvage value listed, this answer is based on the assumption that the salvage value of the crane is $800,000. (Gain or loss is calculated by determining if the cash received on the sale of the item - in this case, the crane - is more (gain), less (loss), or equal (equal) to the salvage value. Based on the assumption that the salvage value is the remaining $800,000, this would mean a loss to Hamilton since they only received $600,000 for the sale of the crane).

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julsineya [31]

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4 years ago
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ohaa [14]

Answer:

d. book value at beginning of year x 2/estimated service life

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Formula:

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Answer and Explanation:

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