Answer:
The <u>loss</u> on sales of equipment is : $850
Explanation:
Depreciation expenses per year for the equipment is: (Original cost - Salvage value ) / expected useful life = (50,000 - 8,000)/6 = 7,000
Depreciation expenses per month for the equipment is: Depreciation expenses per year for the equipment/12 = 7,000/12
3-month depreciation expenses for the equipment from December 31,2016 to 31st March 2017 = 3 x 7,000/12 =1,750
Accumulated depreciation as at April 1 2017 ( the time of equipment disposal) = Accumulated Depreciation account as at December 31st 2016 + 3-month depreciation expenses for the equipment from December 31,2016 to 31st March 2017 = 29,400 + 1,750 = 31,150
Net book value of the equipment = Original cost - Accumulated depreciation as at April 1 2017 = 50,000 - 31,150 = 18,850
Gain/ (loss) on equipment disposal = Selling price - Net book value of the equipment = 18,000 - 18,850 = $(850)
=> Thus, the loss on sales of equipment is $850.
