Sampson Corporation sold a piece of equipment at a gain of $3,600.The equipment was purchased several years ago at a cost of $70,500 and had been amortized a total of $52,900.What is the amount of cash inflow from the sale of the equipment?

Question

Quizplus · Accepted Answer

The book value of the equipment at the time of the sale is:
Book value = Cost - Accumulated amortization
Book value = $70,500 - $52,900
Book value = $17,600
Since the equipment was sold at a gain of $3,600, the selling price would be:
Selling price = Book value + Gain
Selling price = $17,600 + $3,600
Selling price = $21,200
Therefore, the amount of cash inflow from the sale of the equipment is $21,200. Choice D is the correct answer.

Sampson Corporation Sold a Piece of Equipment at a Gain