Answer:
The correct answer is:
gain of $5,000 (c.)
Explanation:
In order to determine, if a profit or loss was made on the batting cage, we will determine the salvage value of the equipment, and find the difference between this value and the selling price. This is done as follows:
Salvage value = initial cost - accumulated depreciation
Salvage value = 310,000 - 260,000 = $50,000
selling price = $55,000
since the selling price is greater than the salvage value of the equipment, a profit (gain) was made on the sale, and the gain is calculated as follows:
gain on sale = selling price - salvage value
= 55,000 - 50,000 = $5,000 gain.
