Question

Marquez purchased some equipment for $58,750 on August 15, 2018. He decided he did not need the equipment so he sold it on June 13, 2019 for $56,500. The equipment was subject to depreciation of $6,964 for 2018 and 2019. What gain or loss will Marquez recognize on the sale of the equipment? g

Answer 1

Answer:

Marquez will recognize a gain of $4714

Explanation:

The gain or loss on disposal of a fixed asset is calculated by deducting the carrying value of an asset from the sales proceeds. If the carrying value is higher than the cash received from the sale, there is a loss on disposal and vice versa.

The carrying value of an asset is,

Carrying value = Cost - Accumulated depreciation

The carrying value for Marquez's equipment is,

Carrying value  = 58750 - 6964  =  $51786

The gain/loss on sale is = 56500 - 51786  =  $4714 Gain

Answer 2

Answer:

A gain of $4,714

Explanation:

When the amount received from the disposal of an asset is higher than the carrying value of the asset, the company makes a gain on disposal.

The carrying amount of an asset is the difference between the cost of the asset and the accumulated depreciation of the asset.

Carrying amount

= $58,750 -  $6,964

= $51,786

Gain/(loss) on disposal = $56,500 - $51,786

= $ 4,714