Answer:
Gain= $6,350
Explanation:
Giving the following information:
Purchase price= $46,200
Salvage value= $6,300
Useful life= 4 years
<u>First, we need to determine the annual depreciation and the accumulated depreciation at the moment of the sale:</u>
<u />
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (46,200 - 6,300) / 4
Annual depreciation= $9,975
Accumulated depreciation= 9,975*2= $19,950
<u>If the selling price is higher than the book value, the company made a gain from the sale:</u>
Book value= 46,200 - 19,950= $26,250
Gain/loss= 32,600 - 26,250
Gain= $6,350
