Question

Tulip Corporation purchased equipment for $ 60 comma 000 on January​ 1, 2017. On December​ 31, 2019, the equipment was sold for $ 26 comma 000. Accumulated Depreciation as of December​ 31, 2019 was $ 28 comma 000. Calculate gain or loss on the sale

Answer 1

Answer:

The sell will generate a loss of $6,000.

Explanation:

Please find the below for detailed calculations and explanations:

- The equipment's net value at the time of disposal is equal to: Book value of the equipment - The accumulated depreciation of the equipment = 60,000 - 28,000 = $32,000;

- The gain/(loss) on the disposal of equipment is equal to: Sell price of the equipment - The equipment's net value at the time of disposal = 26,000 - 32,000 = $(6,000)

Thus, Tulip Corporation's disposal of the equipment at Dec 31st 2019 makes a loss of $6,000.