piece of equipment was bought on 2nd January 2015 for $ 90,000, The Company depreciates its PP&E at 10% on cost with no depreciation during the year of disposal. The equipment was sold on 1st July 2019 for $60,000. What was the gain or loss on disposal? A. Loss of $ 30,000 B. Gain of $ 30,000 C. Loss of $ 6,000 D. Gain of $ 6,000
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.
A piece of equipment was bought on 2nd January 2015 for $ 90,000, The Company depreciates its PP&E at 10% on cost with no
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