Deacon Engineering purchased specific equipment for $675,500 on January 1, 2017. The equipment had no residual value and was estimated to have a 10-year useful life. Deacon used the straight-line method to depreciate this asset. The equipment was sold on January 1, 2024 for proceeds of $250,000. What gain or loss on disposal would be reported for this asset in 20247 O loss of $20,200 O loss of $47,350 O gain of $47,350 O gain of $20,200
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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