Homework Answers
Gain or loss on disposal of Equipment is calculated below:
Equipment (Cost) = $400,000 (Given)
Accumulated Depreciation till January 1,2022 = $245,000 (Given)
Estimated life of assets = 5 Years (Given)
Salvage Value = $50,000 (Given)
Annual Depreciation = (Cost of Asset - Salvage Value)/ Estimated life of assets in years
=($400,000 - $50,000)/5
=$350,000/5
= $70,000
Equipment is sold on July 1,2022,so six month depreciation is calculated below:
Current year six month depreciation = $70,000/2 = $35,000
Book value of Equipment = Equipment (Cost) - Accumulated Depreciation till January 1,2022 - Current year depreciation for six month
= $400,000 - $245,000 - $35,000 = $120,000
Gain on disposal of Equipment = Sale value of Equipment - Book value of Equipment
= $ 135.000 - $120,000
Gain on disposal of Equipment = $15,000
So answer is option (4)
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