Assume that Wu Company earned $15,000 cash revenue and incurred $9,500 in cash expenses in 2015. Using straight-line depreciation and assuming that the office equipment was sold on 12/31/15 for $8,000, the amount of net income or (loss) appearing on the December 31, 2015 income statement would be:

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($18,000 cost - $6,000 salvage value)/6 years = $2,400 annual depreciation expense; $18,000 cost - (3 years x $2,400) accumulated depreciation = $10,800 book value at the end of 2015. $8,000 proceeds from sale - $10,800 = ($2,800) loss on sale of equipment; $15,000 revenue - $9,500 cash expenses -$2,400 depreciation expense - $2,800 loss on sale = $300 net income

Assume That Wu Company Earned $15,000 Cash Revenue and Incurred