Question

Can someone explain to me why this is the answer? I do not understand why.

Application Problem 8-10A SP Ltd. has a December 31 year end. On April 2, 2020, SP purchased a piece of equipment at a cost of $242,000. SP's management estimated that this piece of equipment would have a useful life of five years and a residual value of $32,000. SP uses the straight-line method for depreciating its manufacturing equipment. If SP sold the piece of equipment on June 30, 2022, for $136,000, what amount of the gain or loss would have to be recorded? loss 11,500 The amount of on disposal $

Answer 1

cost of equipment = Date of purchase = useful life = residual value = $242,on April 2, 2020 5 years $32,00 Depreciation up to June 30, 2022 Dep from Apoil 2 2020 to 31 March quell = Cost - residual value uretul lite = $2420w - 320w 5years = 42,00 Dep from April 2021 to 31 March 2022 42000 (asurual) Dep fam 1 April 2022 to June 30 22 - C3 months) = 4200 X 3 2 $1050 . Fot. Accumulated depreciation up to June 302022 = 42,00 +420w . Hluso =9456 wpv of Assets = cast - Accumulated dep = F24200 - 9450 o $147560

coss on sale= wou of Asset - sale value = $147,500 - 136 000 = [11500 Ant of Loss