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Equipment was purchased at a cost of $70,000. It had an estimated useful life of eight years and a residual value of $6,000. Assuming the equipment was sold at the end of Year 6 for $14,000, determine the gain or loss on the sale of the equipment. (Assume the straight-line depreciation method.) O a. A loss of $8,000 2b. A gain of $14,000 C. A gain of $8,000 O d. A loss of $14,000 re you con suhmit your e for You must Anist your 53 PM

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The term boot refers to the 13 a, amount of cash paid or liability incurred when buying a new asset and trading in an old asset. b. total cost of a new asset. 14 O c. amount of the gain or loss on exchange of assets. O d. amount of down payment on an asset 16 18 20 Yow must finisle you it 753 PM /29/2019

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Answer #1

Purchased cost of equipment = $70,000 Useful life 8 Years Residual value - S6,000 Annual depreciation under Straight line method = (Cost-Residual value) / Useful life ($70.000-$6,000) / 8 = $8,000 $70.000-$8,000 * 6 = $22.000 Sale price0f equipment $14,000 Loss on sale of equipment Sale price- Book value $14.000-$22.000 8,000 Loss) Ans : Loss on sale of equipment $8,000

Fixed asset turnover ratio - Sales / Average fixed assets Here numerator in fixed assets turnover ratio is Sales. We should take net sales vabe while comsuting fxed asses tunover ratio Ans D

Boot is cash or liability should added to an exchange to make the value of the traded goods equal. Boot is cash paid or liability incurred when buying new asset or trading of an old asset. Ans A

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