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Asked: 2022-04-13T08:37:42+00:00 In:

A company is selling used office equipment for $12,000. • They purchased it 2…

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A company is selling used office equipment for $12,000. 

• They purchased it 2 years ago for $50,000. 

• It was expected to have a useful life of 5 years. 

• They use straight line depreciation. 

What is the gain or loss on the sale? 

SELECT ONLY ONE 

  • -$28,000 

  • -$18,000 

  • $30,000 

  • $38,000 

  • $45,200

♦ Relevant knowledge

The impact of the depreciation method can be summarized as a changes in the company’s profit or the value of an asset because of the modification in depreciation method. Based on the impact only the best method for depreciation is determined by the company.

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1 Answer

  1. Best Answer

    Answer: Option ( B ) -$18,000

    Explanation:

    Equipment depreciation = ($50,000 – 0,0) / 5, = $10,00 annually

    After two years, the asset’s value is $50,000. $20,000 = $30,000

    Loss on sale of asset = $12,000 – $30,000 = – $18,000

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