An asset was purchased for $33,000 on January 1, 2019. The asset's estimated useful life was five years, and its residual value was $4000. The straight-line method of depreciation was used. Calculate the gain or loss if the asset is sold for $26,000 on December 31, 2019, the last day of the accounting period.
A) $600 gain
B) $1200 loss
C) $1200 gain
D) no gain or no loss
B) $1200 loss
Explanation:
Market value of assets received $26,000
Cost $33,000
Less: Accumulated Depreciation* 5800 (27,200)
Gain or (Loss) ($1200)
*Accumulated Depreciation = ($33,000 - $4000) / 5 = $5800
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