Question

On December 31, Strike Company sold one of its batting cages for $22,877. The equipment had an initial cost of $254,189 and had accumulated depreciation of $228,770. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

a. gain of $20,000
b. loss of $30,000
c. loss of $20,000
d. gain of $30,000

Answer 1

Answer: See explanation

Step-by-step explanation:

First, we'll calculate the book value of the equipment which will be:

= Cost of equipment - Accumulated Depreciation

= $254,189 - $228,770

= $25419

Since the equipment was sold for $22,877, then the loss will be:

= $25419 - $22877

= $2542

Loss of $2542

The options given are incorrect.