Question

pina 1. ABC Lad had a piece of equipment with a cost of $ 150000 and en depreciation of $ 50000. The equipment has a useful life of 5 years da state of $15000. The equipment was sold on July 1 for $ 160000. De tre pain or loss on disposal. If the amount is a gain, enter the answer as a mout below ſile 20000). I the amount is a loss, enter the answer as must below le-20000).

Answer 1

Working Notes : 1
	CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD
	Purchase Cost of Machine	$                   150,000
	Less: Resdual Value	$                      15,000
	Net Value for Depreciation (A)	$                   135,000
	Usefule life of the Assets(B)	5	Years
	Depreciation per year = (A/B)	27,000
	Total Depreciation Per year =	$                      27,000
Working Notes : 2
	CALCULATION OF BOOK VALUE OF THE ASSETS AT THE TIME OF SALE
	Purchase Cost of Equipment	$                   150,000
	Less: Accumulated Depreciation	$                      50,000
	Less: Depreciation for 6 Months ($ 27,000 X 6 / 12 Months)	$                      13,500
	Book Value of the assets as on July 1	$                      86,500
Solution:
	CALCULATION OF GAIN OR LOSS ON SALE OF EQUIPMENT
	Sale value of the Equipment	$                   160,000
	Less: Book Value of the Equipment	$                      86,500
	Gain on Sale of Equipment	$                      73,500
Answer = Gain on sale of Equipment = $ 73,500