A book manufacturing company sells equipment for $450,000 when the book value of the equipment is $400,000.The company would record the extra $50,000 as:

Question

Quizplus · Accepted Answer

The extra $50,000 is a gain on the sale of equipment, which would increase net income and shareholders' equity. This is because the company received more for the equipment than its recorded book value, which is a positive financial outcome. Option B is incorrect because revenue is generated from the sale of goods or services in the normal course of business, while selling equipment is not a core activity for this company. Option C is incorrect because the company did not receive an increase in cash, but rather an increase in its assets (i.e. the gain on the sale of equipment). Option D is incorrect because accumulated amortization would decrease with the sale of equipment, not increase, since it represents the total amount of depreciation applied to the asset over its useful life.

A Book Manufacturing Company Sells Equipment for $450,000 When the Book