Selected information from Hsu Inc. is provided below for the years ending December 31, 2017 and 2016.
$\begin{array}{lrr}
&2017&2016\
\hline\text { Accumulated depreciation } & \$ 32,000 & \$ 29,000 \
\text { Equipment } & 60,000 & 55,000
\end{array}$

During 2017, depreciation expense was recorded. New equipment was acquired for cash. Old equipment which was 70% depreciated with an original cost of $26,000 was sold for a gain of $4,000. For how much was the equipment sold?

Question

Selected information from Hsu Inc. is provided below for the years ending December 31, 2017 and 2016.
$\begin{array}{lrr}
&2017&2016\
\hline\text { Accumulated depreciation } & \$ 32,000 & \$ 29,000 \
\text { Equipment } & 60,000 & 55,000
\end{array}$

During 2017, depreciation expense was recorded. New equipment was acquired for cash. Old equipment which was 70% depreciated with an original cost of $26,000 was sold for a gain of $4,000. For how much was the equipment sold?

Quizplus · Accepted Answer

The original cost of the old equipment was $26,000, and it was 70% depreciated, meaning $26,000 * 70% = $18,200 was the accumulated depreciation on it. The book value of the equipment was therefore $26,000 - $18,200 = $7,800. Selling it for a gain of $4,000 means it was sold for $7,800 + $4,000 = $11,800.