Question

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $30,000. What is the amount of the gain or loss on this transaction

Answer 1

Answer:

The loss is "$10,000" and the gain is "$25,000".

Explanation:

The given amount is:

Cost,

= $215,000

Accumulated depreciation,

= $185,000

Book value,

= $30,000

Now,

The loss on sales will be:

= $Sale \ price-Book \ value$

= $20,000-30,000$

= $10,000$ ($)

The gain on sales will be:

= $Sales \ price-Book \ value$

= $55,000-30,000$

= $25,000$ ($)