Oregon Adventures purchased equipment at the beginning of 2012 for $80,000.They sold the equipment at the end of 2014 for $45,000.If the expected life of the equipment was seven years with a residual value of $10,000,and they use straight-line depreciation,which of the following is true regarding the entry to record the sale of the equipment?

Question

Quizplus · Accepted Answer

When sold, the equipment should have had accumulated depreciation of $40,000 (3 years of straight-line depreciation at $10,000 per year). The book value of the equipment would be $30,000 ($80,000 - $40,000 - $10,000). Since the equipment was sold for $45,000, there is a loss of $5,000 ($45,000 - $30,000). Therefore, the entry to record the sale of the equipment should debit Loss for $5,000.

Oregon Adventures Purchased Equipment at the Beginning of 2012 for $80,000.They