Homework Answers
Answer: $2,600 loss
Working:
Depreciation under straight line method
= (Purchase price – Salvage value) / Useful life
= ($31,000 - $4,000) / 5
= $ 5,400 per year
Net book value as on December 31st =$31,000-$5,400
=$25,600
Gain/(loss)=Sale value-Net book value
= $23,000-$25,600
= ($2,600)
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