Prinkle Corporation had purchased equipment for $50,000 on January 1,2015.On December 31,2017,the corporation sold the equipment for $23,000.Accumulated Depreciation as of December 31,2017 was $25,000. Calculate gain or loss on sale.

Question

Quizplus · Accepted Answer

The book value of the equipment on December 31, 2017, can be calculated as follows: 
Cost of Equipment - Accumulated Depreciation = $50,000 - $25,000 = $25,000

Since the selling price is less than the book value, there is a loss on the sale.

Loss on sale = Selling price - Book value = $23,000 - $25,000 = -$2,000

Therefore, the answer is B) $2,000 loss.

Prinkle Corporation Had Purchased Equipment for $50,000 on January 1,2015