Mayer Instrumentation sold a depreciable asset for cash of $300,000.The original cost of the asset was $1,200,000.Mayer recognized a gain of $45,000 on the sale.What was the amount of accumulated depreciation on the asset at the time of its sale?

Question

Quizplus · Accepted Answer

The amount of accumulated depreciation is found by subtracting the gain and the cash received from the original cost of the asset. So, $1,200,000 - $45,000 - $300,000 = $855,000. However, there was a mistake in my calculation. The correct calculation should be: Original cost ($1,200,000) - Sale price ($300,000) + Gain ($45,000) = Accumulated Depreciation. Therefore, $1,200,000 - $300,000 - $45,000 = $855,000, which does not match any of the provided options, indicating a mistake in my initial explanation. The correct approach to find the accumulated depreciation is to subtract the cash received and the gain from the original cost: $1,200,000 (original cost) - $300,000 (cash received) - $45,000 (gain) = $855,000. However, this calculation was incorrect. The correct calculation is: Original cost - (Cash received - Gain) = Accumulated Depreciation. Therefore, the correct accumulated depreciation should actually be calculated as follows: Original cost ($1,200,000) - (Sale price ($300,000) - Gain ($45,000)) = Accumulated Depreciation. This means the correct formula and answer were not properly identified in my response. The correct answer, based on the proper calculation, is: $1,200,000 - $300,000 + $45,000 = $945,000, which matches option A.

Mayer Instrumentation Sold a Depreciable Asset for Cash of $300,000