Answer:
loss of $10,000
Step-by-step explanation:
The gain or loss is determined by comparing the selling price of the equipment with its book value. The book value is calculated by subtracting the accumulated depreciation from the original cost.
Original cost of the equipment: $95,000
Accumulated depreciation: $30,000
Book value = Original cost - Accumulated depreciation
Book value = $95,000 - $30,000
Book value = $65,000
The selling price of the equipment is $55,000.
Now we can determine the gain or loss:
Gain/Loss = Selling price - Book value
Gain/Loss = $55,000 - $65,000
Gain/Loss = -$10,000 (a loss)
Since the company sold the equipment for $55,000, which is less than the book value of $65,000, the company should record a loss on the sale of $10,000.
Therefore, the company should record a loss of $10,000 for the sale of the equipment.