Equipment was purchased at a cost of $55,000. The equipment had an estimated useful life of 5 years and a residual value of $5,000. Assuming the equipment was sold at the end of Year 4 for $8,000, determine the gain or loss on the sale of equipment. (Assume the straight-line depreciation method.) a. A loss of $8,000 b. A loss of $7,000 Oc. A gain of $8,000 d. A gain of $7,000
Equipment was purchased at a cost of $55,000. The equipment had an estimated useful life of 5 years and a residual value of $5,000. Assuming the equipment was sold at the end of Year 4 for $8,000, determine the gain or loss on the sale of equipment. (Assume the straight-line depreciation method.) a. A loss of $8,000 b. A loss of $7,000 Oc. A gain of $8,000 d. A gain of $7,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 9MC: A fixed asset with a 5-year estimated useful life is sold during the second year. How would the use...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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