Godfrey's Gadgets sold an obsolete piece of equipment for $4,000.Original cost of the item had been $12,500 and its accumulated depreciation was $7,200.This transaction would result in a:

Question

Quizplus · Accepted Answer

To calculate the gain or loss on the sale of an asset, we need to subtract the accumulated depreciation from the original cost to find the book value of the asset:
$12,500 - $7,200 = $5,300 (book value)
Since the asset was sold for $4,000, there is a loss of:
$5,300 - $4,000 = $1,300
Therefore, the answer is B) Loss of $1,300.

Godfrey's Gadgets Sold an Obsolete Piece of Equipment for $4,000