a company sold equipment that originally cost $400,000 for $160,000 cash. the accumulated depreciation on…

a company sold equipment that originally cost $400,000 for $160,000 cash. the accumulated depreciation on the equipment was $240,000. the company should recognize a: multiple choice $240,000 loss. $120,000 gain. $120,000 loss. $0 gain or loss.

a company sold equipment that originally cost $400,000 for $160,000 cash. the accumulated depreciation on the equipment was $240,000. the company should recognize a: multiple choice $240,000 loss. $120,000 gain. $120,000 loss. $0 gain or loss.

Answer

Explanation:

Step1: Calculate book - value of equipment

The formula for book - value is $Book\ value=Cost - Accumulated\ depreciation$. Given $Cost = 400000$ and $Accumulated\ depreciation=240000$, so $Book\ value = 400000 - 240000=160000$.

Step2: Calculate gain or loss on sale

The formula for gain or loss on sale is $Gain/Loss = Sale\ price - Book\ value$. Given $Sale\ price = 160000$ and $Book\ value = 160000$, so $Gain/Loss=160000 - 160000 = 0$.

Answer:

$0 gain or loss.