Answer:
Gain= $850
Explanation:
Giving the following information:
Purchase price= $33,000
Useful life= 4 years
Residual value= $2,000
Sale= $10,600.
<u>First, we need to calculate the annual depreciation:</u>
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (33,000 - 2,000)/4= $7,750
<u>Now, we can calculate the accumulated depreciation:</u>
Accumulated depreciation= 7,750*3= $23,250
<u>To calculate the gain or loss, we need to use the following formula:</u>
Gain/loss= selling price - book value
Book value= purchase price - accumulated depreciation
Book value= 33,000 - 23,250= $9,750
Gain/loss= 10,600 - 9,750
Gain= $850
