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GenaCL600 [577]
3 years ago
10

Jane purchased a piece of equipment for $250,000 for use in her business. She incurred freight charges of $3,500, installation c

harges of $2,500, and maintenance costs of $5,000 for the year. At the end of the year, Jane was offered $200,0000 for the equipment. During the year, she incurred depreciation of $25,000. If Jane sells the equipment, what is the amount of gain (loss) recognized on the transaction?
Business
1 answer:
Ne4ueva [31]3 years ago
4 0

Answer: $36,000 loss

Explanation:

Purchase cost = $250,000

Freight charges = $3500

Installation charges = $2500

Maintenance cost = $5000

Depreciation = $25000

Offered price = $200,000

Total cost incurred = $(250,000 + 3500 + 2500 + 5000)

Total cost incurred = $261,000

Depreciation = $25,000

Book value of equipment = $261,000 - $25,000 = $236,000

Gain/loss = Book value - offered price

Gain/Los = $236,000 - $200,000

$36,000 loss

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