Excalibur Company sells a piece of equipment for $20,000 cash.The gain or loss on the sale of equipment equals:

Question

Quizplus · Accepted Answer

The gain or loss on the sale of equipment equals the difference between the cash received on sale and the book value of the equipment. This is because the book value represents the cost of the equipment minus the accumulated depreciation, which reflects the amount of wear and tear on the equipment over time. When an asset is sold, the difference between the cash received and the book value indicates whether the company has made a profit (gain) or a loss on the sale.

Excalibur Company Sells a Piece of Equipment for $20,000 Cash