Answer:
Gain= $13,000
Explanation:
Giving the following information:
Selling price= $119,000.
The equipment originally cost $330000, had an estimated 5-year life, and an expected salvage value of $50000.
The Accumulated Depreciation account had a balance of $196000.
<u>First, we need to calculate the accumulated depreciation on July 1, 2022.</u>
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (330,000 - 50,000)/5= $56,000
Depreciation for 2022= (56,000/12)*6= 28,000
Accumulated depreciation= 196,000 + 28,000= $224,000
<u>The gain or loss is determined using the book value:</u>
Book value= 330,000 - 224,000= 106,000
Gain/loss= selling price - book value
Gain/loss= 119,000 - 106,000
Gain= $13,000
