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19 January, 01:56

An asset was purchased for $ 26 comma 000 on January 1, 2019. The asset's estimated useful life was five years, and its residual value was $ 4 comma 000. The straightminusline method of depreciation was used. Calculate the gain or loss if the asset is sold for $ 19 comma 000 on December 31, 2019, the last day of the accounting period.

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  1. 19 January, 02:06
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    Loss on disposal $1,800

    Explanation:

    Cost of Asset 26,000

    Useful life 5years

    Sale proceeds 19,000

    Depreciation for the year=$26,000/5=$5,200

    Written Down value (WDV) = $26,000-$5,200=$20,800

    Loss on Disposal = Sale proceeds - WDV=$19,000-$20,800=$1,800

    It is assumed that depreciation is fully charged for the year on asset.
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