Assuming Raven uses straight-line depreciation, the Company would recognize a $2,000 gain.
<h3>What is
straight-line depreciation?</h3>
The simplest way to determine depreciation over time is through straight-line depreciation. According to this strategy, an asset's value is reduced by the same amount for each year that it is in use.
<h3>Depreciation formula:</h3>
(Depreciation expense per year = (Cost of the asset - Salvage value) ÷ Useful life.
The given data is -
The cost of asses is given as $64,000.
The salvage value is given as $10,000.
The sole price is $30,000.
Calculation for the depreciation-
Depreciation expense per year = ($64,000 Cost - $10,000 Salvage) ÷ (6 Year life)
Depreciation expense per year = $9,000
Accumulated depreciation on January 1, Year 5 = ($9,000 per year) × (4 years)
Accumulated depreciation on January 1, Year 5 = $36,000.
Book value = $64,000 Cost - $36,000 Accumulated depreciation
= $28,000
Gain on sale = $30,000 Sales price - $28,000 Book value
= $2,000)
Therefore, the gain on the scale is $2,000.
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