Question

Motor Sales sold its old office furniture for $ 8 comma 500. The original cost was $ 18 comma 000​, and at the time of​ sale, accumulated depreciation was $ 10 comma 000. What is the effect of this​ transaction?

Answer 1

$1,500

Explanation:

For the computation of effect of the transaction first we need to find out the book value sold for which is shown below:-

Book Value sold for = Original cost of the furniture - Accumulated depreciation

= $18,000 - $10,000

= $8,000

Gain = $9,500 - $8,000

= $1,500

Therefore for computing the effect of the transaction we simply applied the above formula and as we can see that there is gain of $1,500