On January 1, 2019, Shadow, Inc. purchased equipment for $54,000. Shadow uses straight-line depreciation and estimates a 10-year useful life and a $6,000 salvage value. On December 31, 2026, Shadow sells the equipment for $28,400.
In recording this sale, Shadow should reflect:

Question

Quizplus · Accepted Answer

($54,000 - $6,000) / 10 = $4,800 annual depreciation
$54,000 - (8 x $4,800) = $15,600 book value at disposal date
$28,400 proceeds - $15,600 book value = $12,800 gain