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12 May, 01:12

Sumner sold equipment that it uses in its business for $31,800. Sumner bought the equipment a few years ago for $79,100 and has claimed $39,550 of depreciation expense. Assuming that this is Sumner's only disposition during the year, what is the amount and character of Sumner's gain or loss

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  1. 12 May, 03:26
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    Sumner's has a loss of $-7750 from the sale of the equipment

    Explanation:

    Solution

    Given that:

    We compute the amount of profit and loss, few steps will be taken which is given below:

    Step 1: we compute the book value of the equipment which is shown below:

    Book value = purchase price - depreciation claimed

    = $79,100 - $39,550

    = $39550

    Therefore then book value is $39,550

    Step 2: we calculate the amount of Sumner's gain or loss which is shown below:

    The gain (loss) is = the value (sale) - book value

    = $31,800 - 39550

    = - 7750

    Therefore the loss from the sale of the equipment is - $7750

    Which implies that Sumner's has a loss of $-7750
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