Ladd Company sold a plant asset that originally had cost $50,000 for $22,000 cash. If Ladd correctly reports a $5,000 gain on this sale, the accumulated depreciation on the asset at the date of sale must have been:

Question

Quizplus · Accepted Answer

The gain on sale is calculated as the selling price minus the book value of the asset. The book value is the original cost minus accumulated depreciation. Here, $22,000 (selling price) - ($50,000 (original cost) - accumulated depreciation) = $5,000 (gain). Solving for accumulated depreciation gives $33,000.

Ladd Company Sold a Plant Asset That Originally Had Cost