### Example: Sale of Equipment and Reporting Gains or LossesOn November 4, 2020, GT Corporation sells a piece of its equipment. GT Corporation had initially purchased the equipment for $350,000. The company had recorded $230,000 in depreciation for this piece of equipment as of the date of sale.**Scenario Analysis:**1. **If GT Corporation receives $150,000 cash when they sell the equipment, they will report a _________ on their November 2020 Income Statement.** 2. **If they instead receive $100,000 cash when they sell the equipment, they will report a _________.****Answer Choices:**- a. $150,000 gain; $100,000 gain.- b. $80,000 gain; $130,000 loss.- c. $30,000 loss; $20,000 gain. *(Highlighted Option)*- d. $30,000 gain; $20,000 loss.**Correct Analysis:**- Receiving $150,000 in cash results in a $30,000 loss.- Receiving $100,000 in cash results in a $20,000 gain.

Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…

On November 4, 2020, GT Corporation sells a piece of its equipment. GT Corporation had initially purchased the equipment for $350,000. The company had recorded $230,000 in depreciation for this piece of equipment as of the date of sale. If GT Corporation receive $150,000 cash when they sell the equipment, they will report a November 2020 Income Statement; if they instead receive $100,000 cash when they sell the equipment, they will on their report a $150,000 gain; $100,000 gain. b. $80,000 gain; $130,000 loss. $30,000 loss; $20,000 gain. а. с. d. $30,000 gain; $20,000 loss.

On November 4, 2020, GT Corporation sells a piece of its equipment. GT Corporation had initially purchased the equipment for $350,000. The company had recorded $230,000 in depreciation for this piece of equipment as of the date of sale. If GT Corporation receive $150,000 cash when they sell the equipment, they will report a November 2020 Income Statement; if they instead receive $100,000 cash when they sell the equipment, they will on their report a $150,000 gain; $100,000 gain. b. $80,000 gain; $130,000 loss. $30,000 loss; $20,000 gain. а. с. d. $30,000 gain; $20,000 loss.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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