Answer:
Loss= $4,000
Step-by-step explanation:
Giving the following information:
Purchase price= $74,000
Salvage value= $14,000
Useful life= 5 years
First, we need to calculate the annual depreciation and the accumulated depreciation:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (74,000 - 14,000) / 5
Annual depreciation= $12,000
Accumulated depreciation= 12,000*2= $24,000
Now, we determine the book value at the moment of the sale:
Book value= purchase price - accumulated depreciation
Book value= 74,000 - 24,000= $50,000
Finally, if the selling price is higher than the book value, the company gains from the sale.
Gain/loss= 46,000 - 50,000
Loss= $4,000