A company sold equipment that originally cost $250,000 for $50,000 cash. the accumulated depreciation on the equipment was $200,000. the company should recognize a:

Question

Business

Paxton Schneider

9 December, 10:50

A company sold equipment that originally cost $250,000 for $50,000 cash. the accumulated depreciation on the equipment was $200,000. the company should recognize a:

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Answers (2)

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Frederick Murray · Answer 1

There is no gain/loss on disposal hence the company would only de-recognize the asset from the books and recognize the cash received cash received from the disposal.

Explanation:

Cost of asset = $250,000

Accumulated depreciation = $200,000

Net book value of asset = Cost of asset - Accumulated depreciation

= $250,000 - $200,000

= $50,000

Sales on disposal = $50,000

Gain / (loss) on disposal = sales - net book value

= $50,000 - $50,000

= 0

There is no gain/loss on disposal hence the company would only de-recognize the asset from the books and recognize the cash received cash received from the disposal.

Jacquelyn Kramer · Answer 2

Carrying Value of the asset = Cost of the asset-Accumulated Depreciation

=250000-200000

=$50000

The asset is sold for $50000, Thus there is no loss or gain on the transaction.