Question

An asset's book value is $25,200 on January 1, Year 6. The asset is being depreciated $350 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $18,400, the company should record:

Answer 1

Answer:

A loss of $400

Explanation:

Loss or gain is obtained by subtracting the selling price form the book value of the asset.

The Selling price is $18,400.

The book value is?

Year 6, January 1, Book value is $25,200

Depreciation per month is 350

There are 12 months in year 6 ,and 6 months of depreciation in year 7.

Total depreciation amount is $350 x 18 months = $6300

New book value

= $25,200 - $6300

= $18,900

Selling price is $18,400

gain or loss is $18,400- $18,900

=(400)

A loss of $400