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14 May, 01:14

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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  1. 14 May, 01:24
    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.

    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.
  2. 14 May, 01:36
    0
    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.
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