Question

On December 31, Bonds Baseball Company has decided to sell one of its batting cages. The initial cost of the equipment was $225,000 with an accumulated depreciation of $195,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $10,000. What is the amount of the gain or loss on this transaction

Answer 1

The gain or loss on the sale of an asset is computed by subtracting its book value from the sale price. In this case, the sale of the batting cage results in a loss of $20,000.

Step-by-step explanation:

The student is asking about how to calculate the gain or loss on the sale of an asset, specifically a batting cage. To determine the gain or loss, you subtract the book value of the asset from the sales price. The book value is the initial cost of the asset minus the accumulated depreciation. The initial cost of the batting cage is $225,000, and the accumulated depreciation is $195,000, resulting in a book value of $30,000. The batting cage is sold for $10,000. Therefore, the loss on the sale is $30,000 (book value) - $10,000 (sale price) = $20,000.