Question

a company sold equipment that originally cost $310,000 for $186,000 cash. the accumulated depreciation on the equipment was $124,000. the company should recognize a:

Answer 1

The company should recognize no gain or loss on the sale of the equipment because the sale proceeds of $186,000 are equal to the equipment's book value after depreciation.

Step-by-step explanation:

When a company sells equipment, the gain or loss on disposal is calculated by comparing the equipment's book value (original cost minus accumulated depreciation) to the sale proceeds. In this scenario, the original cost of the equipment is $310,000, and the accumulated depreciation is $124,000. Therefore, the book value of the equipment at the time of sale is $186,000 ($310,000 original cost - $124,000 accumulated depreciation). Since the equipment was sold for $186,000 cash, which equals its book value, the company should recognize no gain or loss on the sale of the equipment.