On July 1, 2021, Hale Kennels sells equipment for $220,000.The equipment originally cost $600,000, had an estimated 5-year life and an expected salvage value of $100,000.The Accumulated Depreciation account had a balance of $350,000 on January 1, 2021, using the straight-line method.The gain or loss on disposal is

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The equipment's book value at the time of sale is calculated by subtracting the accumulated depreciation from the original cost. The original cost is $600,000. The annual depreciation is ($600,000 - $100,000) / 5 = $100,000. By January 1, 2021, the accumulated depreciation is $350,000, which means the equipment has been depreciated for 3.5 years (since the annual depreciation is $100,000, and $350,000/$100,000 = 3.5 years). To find the book value on July 1, 2021, we need to add another half year of depreciation: $100,000/2 = $50,000. So, the total accumulated depreciation by July 1, 2021, is $350,000 + $50,000 = $400,000. The book value is then $600,000 - $400,000 = $200,000. The equipment is sold for $220,000, so the gain on disposal is $220,000 - $200,000 = $20,000.

On July 1, 2021, Hale Kennels Sells Equipment for $220,000