Answer:
Selling gain= $68,000
Explanation:
Giving the following information:
Purchasing price= $760,000
Useful life= 10 years
Salvage value of $40,000.
On December 31, 2020, the equipment was sold for $140,000.
First, we need to calculate the accumulated depreciation.
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (760,000 - 40,000)/10
Annual depreciation= 72,000
Accumulated depreciation= 72,000*9= $648,000
To calculate the gain or loss, we need to compare the book value with the selling price:
Book value= 720,000 - 648,000= 72,000
Selling price= 140,000
Selling gain= $68,000
