Question

A machine that cost $36,000 and on which $26,500 of depreciation had been recorded was disposed of for $10,200. Indicate whether a gain or loss should be recorded, and for what amount.

Answer 1

Answer:

The Gain of $700.

Explanation:

For the computation of gain or loss first we need to find out the book value which is shown below:-

Book value = Purchase cost - Accumulated Depreciation

= $36,000 - $26,500 = $9500

Gain or Loss = Selling Price - Book Value

= $10,200 - $9500

= $700

So, there is a

The Gain of $700 as selling price is more than the book value

Therefore for computing the gain or loss we simply applied the above formula.