Spataro Industries owns some equipment with an original cost of $53,800 and accumulated depreciation of $26,350.If the equipment is sold for $25,500,the gain or loss recognized on the sale would be:
A)$ 850 gain
B)$ 850 loss
C)$1,950 gain
D)$1,950 loss

Question

Quizplus · Accepted Answer

To calculate the gain or loss recognized on the sale of equipment, we need to subtract the equipment's book value from its selling price. Book value can be calculated as follows:
Original cost - Accumulated depreciation
Therefore, the book value of the equipment is:
$53,800 - $26,350 = $27,450
Since the selling price of the equipment is less than its book value, we will incur a loss on the sale. The amount of the loss is:
$25,500 - $27,450 = $1,950
Therefore, the answer is D, $1,950 loss.

Spataro Industries Owns Some Equipment with an Original Cost of $53,800