Tulip Corporation purchased equipment for $58,000 on January 1, 2017. On December 31, 2019, the equipment was sold for $24,000. Accumulated Depreciation as of December 31, 2019 was $33,000. Calculate gain or loss on the sale.

Question

Quizplus · Accepted Answer

To calculate gain or loss on the sale of equipment, we need to compare the sale price with the net book value of the equipment. 
Net book value = cost of equipment - accumulated depreciation 
= $58,000 - $33,000 
= $25,000 
Since the sale price is less than the net book value, there is a loss on the sale. 
Loss on sale = sale price - net book value 
= $24,000 - $25,000 
= -$1,000 (negative because it is a loss) 
Therefore, the correct answer is B, $1000 loss.

Tulip Corporation Purchased Equipment for $58,000 on January 1, 2017