Final answer:
The book value of the office equipment was $11,000 at the time of sale, calculated as the cost of the asset minus its accumulated depreciation. The equipment was sold for $14,000, resulting in a $3,000 gain.
Step-by-step explanation:
The book value of the asset at the time of the sale is calculated by subtracting the accumulated depreciation from the original cost of the asset. In this case, the office equipment had an original cost of $23,000 and accumulated depreciation of $12,000, leading to a book value of $11,000 at the time of sale.
The book value of the office equipment at the time of sale was $11,000. This is found by subtracting the accumulated depreciation ($12,000) from the cost ($23,000).
To determine the book value of an asset, you need to know the original cost of the asset and the amount of depreciation that has been charged against it over time. Depreciation is the allocation of the cost of a tangible asset over its useful life. In this instance, the office equipment was initially valued at $23,000. Over time, it depreciated by $12,000, reflecting the wear and tear or usage of the equipment.
When the equipment was sold for $14,000, we can evaluate the transaction's outcome by comparing the sale price to the book value. As mentioned, the book value is $11,000, which means that the sale resulted in a gain because the selling price was higher than the book value. Specifically, the gain on sale would be the difference between the sale price of $14,000 and the book value, amounting to a $3,000 gain, which is a positive outcome for the company.