Question

From the income statement Depreciation expense $500 Loss on sale of equipment 4,000 From the balance sheet Beginning Equipment 12,500 Ending Equipment 6,500 Beginning Accumulated Depreciation 2,000 Ending Accumulated Depreciation 2,200 No new equipment was bought during the period. For the equipment that was sold, determine its original cost.

Answer 1

The correct answer is $6,000.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the original cost by using following formula:

Original cost = Beginning balance - Closing balance

By putting the value in the formula, we get

= $12,500 - $6,500

= $6,000

Hence, the cost of the sold asset is $6,000.