Tony Company sells equipment for $20,000 cash. The equipment has a historical cost of $60,000 and accumulated depreciation of $54,000. What is the gain or loss on sale of the equipment?

Question

Quizplus · Accepted Answer

The gain or loss on sale of the equipment is calculated as the difference between the selling price and the book value of the equipment. The book value of the equipment is the historical cost minus the accumulated depreciation, which is $60,000 - $54,000 = $6,000. The gain on sale of the equipment is therefore $20,000 - $6,000 = $14,000.

Tony Company Sells Equipment for $20,000 Cash