Metalcrafts Inc.Selected information from the company's financial records is presented in the following table:
$\begin{array}{lr}
\text { Equipment, December 31, Year 1 } & \$ 300,000 \
\text { Equipment, December 31, Year 2 } & 400,000 \
\text { Accumulated depreciation, December 31, Year 1 } & 80,000\\text { Accumulated depreciation, December } 31 \text {, Year } 2&60,000
\end{array}$ During Year 2, the company sold equipment with a cost of $50,000 and accumulated depreciation of $30,000. A gain of $10,000 was recognized on the sale of the equipment. Only one equipment sale was made during the year.
-Refer to the figure Metalcrafts Inc.What amount would be reported as the cash proceeds from the sale of equipment?

Question

Metalcrafts Inc.Selected information from the company's financial records is presented in the following table:
 $\begin{array}{lr}
\text { Equipment, December 31, Year 1 } & \$ 300,000 \
\text { Equipment, December 31, Year 2 } & 400,000 \
\text { Accumulated depreciation, December 31, Year 1 } & 80,000\\text { Accumulated depreciation, December } 31 \text {, Year } 2&60,000
\end{array}$ During Year 2, the company sold equipment with a cost of $50,000 and accumulated depreciation of $30,000. A gain of $10,000 was recognized on the sale of the equipment. Only one equipment sale was made during the year.
-Refer to the figure Metalcrafts Inc.What amount would be reported as the cash proceeds from the sale of equipment?

Quizplus · Accepted Answer

The cash proceeds from the sale of equipment can be calculated by adding the gain on sale to the net book value of the equipment sold. The net book value is the cost of the equipment ($50,000) minus the accumulated depreciation ($30,000), which equals $20,000. Adding the gain of $10,000 gives cash proceeds of $30,000.

Metalcrafts Inc During Year 2, the Company Sold Equipment with a Cost