A business sold equipment for $15,000 in cash proceeds which had an original cost of $50,000 and accumulated depreciation at the date of sale of $40,000.Which of the statements below is true?

Question

Quizplus · Accepted Answer

The original cost of the equipment was $50,000 and the accumulated depreciation at the date of sale was $40,000. Therefore, the carrying value of the equipment was $10,000 ($50,000 - $40,000). 
Since the business sold the equipment for $15,000, it realized a gain of $5,000 ($15,000 - $10,000). 
Therefore, a gain of $5,000 was reported in the income statement (as it is a non-operating gain) and a cash inflow of $15,000 was reported in the cash flow statement (as it is the amount of cash received from the sale). 
Hence, option D is the correct answer.

A Business Sold Equipment for $15,000 in Cash Proceeds Which