Homework Answers
Solution a. Calculation of Book Value of the asset at the time of sale :-
Cost of Office Equipment = $ 41280
Less :Accumulate Depreciation = $ 37530
Book Value of the Asset = $ 3750
b. Calculation of Amount of gain or loss on disposal :-
Sale Value of Office Equipment = $ 5390
Less :Book Value of the Asset = $ 3750
Gain on sale of Office Equipment = $ 1640
c. Sale Effect on Net Income :-
Net Income Will Increase by $ 1640 due to sale of Office Equipment.
d. Sale Effect on Total Assets on the Balance Sheet :-
Total Assets Will Decrease by the amount of Book Value $ 3750 due to sale of Office Equipment.
e. Effect on Cash Flow Statement :-
Cash Flow from Operating Activities = Decrease by the amount of Gain on the disposal of Office Equipment i.e $ 1640
Cash Flow from Investing Activities = Increase by the amount of sale value of Office Equipment i.e $ 5390
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