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30 July, 11:22

An asset's book value is $25,200 on January 1, Year 6. The asset is being depreciated $350 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $18,400, the company should record:

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  1. 30 July, 12:19
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    A loss of $400

    Explanation:

    Loss or gain is obtained by subtracting the selling price form the book value of the asset.

    The Selling price is $18,400.

    The book value is?

    Year 6, January 1, Book value is $25,200

    Depreciation per month is 350

    There are 12 months in year 6, and 6 months of depreciation in year 7.

    Total depreciation amount is $350 x 18 months = $6300

    New book value

    = $25,200 - $6300

    = $18,900

    Selling price is $18,400

    gain or loss is $18,400 - $18,900

    = (400)

    A loss of $400
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