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24 October, 04:57

Motor Sales sold its old office furniture for $ 5,500. The original cost was $ 15,000​, and at the time of​ sale, accumulated depreciation was $ 12,000. What is the effect of this​ transaction?

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  1. 24 October, 08:29
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    The effect of this transaction is a gain of $2,500 on disposal.

    Explanation:

    Cost of motor = $15000

    Accumulated depreciation = $12000

    Net book or carrying value = 15000 - 12000

    = $3,000

    Income from disposal = $5,500

    Gain / (loss) on disposal = $5,500 - $3,000

    = $2,500

    The effect of this transaction is a gain of $2,500 on disposal.
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