Question

On January 1, 2015, Burns Company purchased equipment for $172,000. Burns uses straight-line depreciation and estimates an eight-year useful life and a $12,000 salvage value. On December 31, 2019, Burns sells the equipment for $60,000.

In recording this sale, Burns should reflect:

Answer 1

Cost of equipment	$ 172,000
Less: Salvage value	$ (12,000)
Depreciable value	$ 160,000
Life of equipment	8 years
Depreciation per year ($160,000/8)	$    20,000
Number of years used	5 Years
Accumulated depreciation on December 31, 2019	$ 100,000
Selling price of equipment	$    60,000
Less:Book value of equipment ($172,000-$100,000)	$ (72,000)
Loss on sale of equipment	$ (12,000)

In recording of this sale, Burns should reflect loss on sale of USD $12,000

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