Question

Suffolk Associates sold office furniture for cash of $42,000. The accumulated depreciation at the date of sale amounted to $38,000, and a gain of $18,000 was recognized on the sale. The original cost of the asset must have been:

Answer 1

Answer:

$62,000= original cost

Explanation:

First, we need to calculate the book value:

Gain from sale= selling price - book value

18,000= 42,000 - book value

boom value= 24,000

Now, we can determine the original cost:

Book value= original cost - accumulated depreciation

24,00= original cost - 38,000

$62,000= original cost