HH Co. purchased equipment at the beginning of 2020 for $46,000 with an estimated residual value...
HH Co. purchased equipment at the beginning of 2020 for $46,000 with an estimated residual value of $4,600 that it has depreciated for the past 2 full years using the double-diminishing-balance method at a rate of 40%. They sold the equipment at the beginning of 2022 for $18,400 cash.
Determine the amount of the gain or loss on the disposal of the
equipment?
Homework Answers
Depreciation for 2020 = 46,000*40% = 18,400
Depreciation for 2021 = (46,000-18,400)*40% = 11,040
Book value of equipment at the beginning of 2022
= 46,000 - (18,400+11,040)
= 16,560
Gain(Loss) on disposal = Cash received - Book value
= 18,400 - 16,560
Gain of $1840
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