Glouchester Associates sold office equipment for cash of $142,000.The accumulated depreciation at date of sale amounted to $138,000,and a gain of $18,000 was recognized on the sale.The original cost of the asset must have been:

Question

Quizplus · Accepted Answer

The original cost of the asset can be calculated by adding the accumulated depreciation and the book value at the time of sale. The book value is the cash received minus the gain on sale. So, $142,000 (cash) - $18,000 (gain) = $124,000 (book value). Adding the accumulated depreciation: $124,000 + $138,000 = $262,000.

Glouchester Associates Sold Office Equipment for Cash of $142,000