Answer:
The loss on sale is $ 4,000.
Explanation:
Loss or gain on an Asset can be determined by this formula:
Loss or gain = Disposal/Consideration price - Book Value of Asset.
<u>Determining book value.</u>
Book Value of Asset = Acquisition cost - Accumulated depreciation.
Acquisition cost is 50,000.
Annual depreciation expense = Depreciation base/Number of years.
(50,000 - 5,000) /5= 9,000
Accumulated depreciation is 18,000 + (9000 × 4/12) = 21,000.
Therefore book value of asset = 50,000 - 21,000.
Book Value of Asset = 29,000.
Disposal/Consideration price = 25,000
<u>Determining loss or gain on asset disposal.</u>
Loss or gain = Disposal/Consideration price - Book Value of Asset.
Loss or gain = 29,000 - 32,000.
Loss on sale was = 4,000.
