Answer:
The answer is loss of $10,000 on the sale of the equipment
Step-by-step explanation:
The formula for straight-line depreciation is:
(Cost of asset - salvage value) ÷ number of useful life.
Cost of asset is $250,000
Salvage value is $50,000
Useful life is 5 years
So depreciation for the year is:
($250,000 - $50,000) ÷ 5 years
$200,000 ÷ 5 years
=$40,000
January 1 2010 through June 30 2013 is 3 years and 6months
Accumulated depreciation will be:
3.5 years( 3 years + 6months/12 months) x $40,000
$140,000
Carrying value or net book value at this date is $250,000 - $140,000
=$110,000.
The equipment was sold for $100,000.
Selling price - carrying value
=$100,000 - $110,000
= - $10,000
We have a loss of $10,000 on the sale of equipment