Question

An asset was sold during the year. The cost of the asset was $64,500. The asset was depreciated for four years, using the straight-line method at 10% per annum. The proceeds from the sale of this asset was $38,700. What was the gain or loss on the asset, if any?

Answer 1

Answer:

There was a loss on the asset of $3,618.45.

Explanation:

Given that an asset was sold during the year, and the cost of the asset was $ 64,500, after which the asset was depreciated for four years, using the straight-line method at 10% per annum, and finally the proceeds from the sale of this asset was $ 38,700, to determine what was the gain or loss on the asset, if any, the following calculation must be performed:

64,500 x 0.9 ^ 4 = X

42,318.45 = X

42,318.45 - 38,700 = X

3,618.45 = X

Thus, there was a loss on the asset of $ 3,618.45.