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7 March, 20:46

On December 31, Strike Company sold one of its batting cages for $11,597. The equipment had an initial cost of $472,800 and had accumulated depreciation of $449,160. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

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  1. 7 March, 21:13
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    Loss on transaction is $12,043

    Explanation:

    Given:

    Initial cost of equipment = $472,800

    Accumulated depreciation = $449,160

    Salvage value = Initial cost - accumulated depreciation

    = $472,800 - 449,160

    = $23,640

    Selling price of equipment = $11,597

    Since selling price is lesser than salvage value, the company incurs loss on the sale of equipment.

    Loss on sale of equipment = Salvage value - selling price

    = 23,640 - 11,597

    = $12,043
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