Hector would like to buy a new pair of soccer cleats. Hector prefers Adidas to Puma brand soccer cleats. But Hector chooses to b
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Answer:
5,280 net income for the Year 3
Explanation:
This would be the situation:
17,400 revenue
11,000 expenses
gain/loss on sale of equipment
= net income year 3
To know the result of the sale of equipment we have to do
sales price - book value = gain/loss on sale of equipment
8900 - book value = gain/loss
We have to determinate the book value.
book value = adquisition cost - acumulated depreciation
The equipment cost 15,200 + 1,300 transportation cost = <u>16,500 Adquisition Cost</u>
acumulated depreciation = depreciation per year * 3 years
and depreciation per year is:
Here we have all the values, so we stop digging and start solving.
- <em>depreciation </em>= (16,500-5,700)/5 = 2,160
- <em>acumulated depreciation</em> = 2,160 * 3 = 6,480
- <em>book value</em> = 16,500 - 6,480 = 10,020
- <em>gain/loss </em>= 8,900 - 10,020 = -1,120 LOSS on sale of Equipment
net income = 17,400 - 11,000 - 1,120 = 5,280 net income for the Year 3