Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a loss of $10,000. This implies that $40,000 cash was received from the sale.
Cost of asset $100,000
Accumulated depreciation 40,000
Carrying amount 60,000
Loss on sale (10,000)
Cash received $ 50,000

Question

Quizplus · Accepted Answer

The cash received from the sale is calculated by subtracting the loss from the carrying amount of the asset. The carrying amount is $60,000 (cost of $100,000 minus accumulated depreciation of $40,000), and the loss on sale is $10,000, so the cash received is $50,000 ($60,000 - $10,000), not $40,000.

Equipment Costing $100,000 with Accumulated Depreciation of $40,000 Is Sold