On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?
A) Cannot be determined
B) No gain or loss
C) Gain of $25,000
D) Gain of $55,000

Question

Quizplus · Accepted Answer

To determine the gain or loss, we need to subtract the book value (initial cost - accumulated depreciation) from the sale price.

Book value = $215,000 - $185,000 = $30,000
Sale price = $55,000

Gain or loss = Sale price - book value
= $55,000 - $30,000
= $25,000

Therefore, the answer is choice C - gain of $25,000.

On December 31, Strike Company Has Decided to Sell One