On January 1, 2009, Owl Corporation purchased equipment for $76,000, having a useful life of ten years and an estimated residual value of $4,000.Owl has recorded monthly depreciation using the straight-line method.On December 31, 2017, the equipment was sold for $14,000.The gain to be recognized from the sale is

Question

Quizplus · Accepted Answer

The equipment's annual depreciation is ($76,000 - $4,000) / 10 = $7,200. By December 31, 2017, 9 years of depreciation have been recorded, totaling $64,800. The book value at the time of sale is $76,000 - $64,800 = $11,200. The gain is the sale price minus the book value: $14,000 - $11,200 = $2,800.

On January 1, 2009, Owl Corporation Purchased Equipment for $76,000