Question

Tulip Company purchased equipment for​ $58,000 on January​ 1, 2017. On December​ 31, 2019, the equipment was sold for​ $23,000. Accumulated Depreciation as of December​ 31, 2019 was​ $32,000. Calculate gain or loss on the sale.

Answer 1

Answer:

Net loss = $3,000

Explanation:

To calculate gain or loss on a fixed asset, lets first work out the net book value,

Net book value = Historic cost of asset - Accumulated Depreciation

NBV = 58,000 - 32,000 = $26,000

Net loss or gain = Selling price - Net book value

Net loss = 23,000 - 26,000 = $3,000

Hope that helps.