Question

Lassen Corporation sold a machine to a machine dealer for $37,250. Lassen bought the machine for $68,000 and has claimed $22,500 of depreciation expense on the machine. What gain or loss does Lassen realize on the transaction

Answer 1

Loss of $8,250

Step-by-step explanation:

Lassen corporation sold a machine to a machine dealer at a price of $37,250

Lassen bought the machine for $68,000

He claimed $22,500 of depreciated expenses on the machine

Therefore, the gain or loss realized on the transaction can be calculated as follows

Gain/loss= Cash received-book value

Book value= Original basis-accumulated depreciation

= $68,000-$22,500

= $45,500

Gain/loss= $37,250-$45,500

= $8,250

Hence Lassen realized a loss of $8,250 on the transaction