Question

An asset that costs $97,600 and has accumulated depreciation of $82,000 is sold for $18,000. What amount of gain or loss will be recognized when the asset is sold?

Answer 1

a gain of $2,400

Step-by-step explanation:

To compute the gain or loss on sale, we must determine first the book value of an asset at the time of sale then deduct the proceeds of the sale.

First, compute the book value of an asset.

Cost of an asset $97,600 less accumulated depreciation of $82,000 equals $15,600

Finally, find the difference between the proceeds and the book value of an asset to determine the gain or loss on sale.

Book value $15,600

Less: Proceeds $18,000

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Gain of $2,400

*Proceeds is greater than the book value of an asset that is why the sale is on gain of $2,400