Exhibit 11-03
On January 1, 2016, Wheeler, Inc. purchased some equipment for $3,900. The equipment had an estimated life of five years and an expected residual value of $200. On July, 1, 2018, the equipment was sold for $1,000. Wheeler uses straight-line depreciation.
-Refer to Exhibit 11-03, what was the amount of the loss or gain recognized in the sale?

Question

Quizplus · Accepted Answer

The equipment depreciates $740 per year [($3,900 - $200) / 5 years]. By July 1, 2018, 2.5 years of depreciation has accumulated, totaling $1,850 ($740 * 2.5). The book value at the time of sale is $2,050 ($3,900 - $1,850). Selling it for $1,000 results in a $1,050 loss ($2,050 - $1,000).

Exhibit 11-03 on January 1, 2016, Wheeler, Inc. Purchased Some Equipment for Equipment