Question

On December 31, Strike Company sold one of its batting cages for $11,597. The equipment had an initial cost of $472,800 and had accumulated depreciation of $449,160. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

Answer 1

Loss on transaction is $12,043

Step-by-step explanation:

Given:

Initial cost of equipment = $472,800

Accumulated depreciation = $449,160

Salvage value = Initial cost - accumulated depreciation

= $472,800 - 449,160

= $23,640

Selling price of equipment = $11,597

Since selling price is lesser than salvage value, the company incurs loss on the sale of equipment.

Loss on sale of equipment = Salvage value - selling price

= 23,640 - 11,597

= $12,043