Question

Brown corp recently recognized a 4000 dollar loss on the sale of equipment that it had...

Brown corp recently recognized a 4000 dollar loss on the sale of equipment that it had owned for 36 months. Brown paid 20000 dollars for the equipment and had used straight line depreciation with a 4 year useful life and a 2000 dollar salvage value. How much did brown sell the equipment for

A. 2500

B. 500

C. 6500

D. Not enough information

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Answer #1
Annual Depreciation = (Cost Of The Asset- Salvage Value)/ Life Of The Asset
= $20000-2000/4 years
= $4500 per year
Accumulated depreciation = Annual depreciation * number of years used
=4500*3
=13500
Book Value = Original cost - accumulated deoreciation
=20000-13500
=6500
Sale value of asset = Book value - loss on sale
=$6500-4000
=$2500
Correct Option : A. 2500
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