Question

equipment which cost 431000 and had accumulated depreciation of 230000 was sold for 228000 thhis transaction should ______

Answer 1

When equipment is sold for a price higher than its net book value, a gain is recognized on the income statement.

Step-by-step explanation:

The transaction of selling equipment that cost $431,000 with accumulated depreciation of $230,000 for $228,000 will result in a gain or loss for the company. To determine the gain or loss, we need to compare the selling price to the net book value of the equipment. The net book value is calculated by subtracting the accumulated depreciation from the original cost of the equipment. In this case, the net book value would be $431,000 - $230,000 = $201,000.

Since the selling price of $228,000 is higher than the net book value of $201,000, there will be a gain on the sale of the equipment. The gain can be calculated by subtracting the net book value from the selling price: $228,000 - $201,000 = $27,000.

Therefore, the transaction should be recorded as a gain of $27,000 on the income statement, increasing the company's profit.