On May 1, 2018, Pinkley Company sells office furniture for $300,000 cash. The office furniture originally cost $750,000 when purchased on January 1, 2011. Depreciation is recorded by the straight-line method over 10 years with a salvage value of $75,000. What gain should be recognized on the sale?

Question

Quizplus · Accepted Answer

The accumulated depreciation is $67,500 per year for 7 years, totaling $472,500. The book value is $277,500 ($750,000 - $472,500). The gain is $22,500 ($300,000 - $277,500).

On May 1, 2018, Pinkley Company Sells Office Furniture for $300,000