Answer:
A loss on sale is $10,000.
Step-by-step explanation:
Consider the provided information.
Equipment was purchased at a cost of $78,000. The equipment had an estimated useful life of five years and a residual value of $3,000.
[tex]\text{Depreciation expense}=\frac{\text{(Cost-Residual)}}{\text{Useful life}}[/tex]
Substitute the respective values.
[tex]\text{Depreciation expense}=\frac{78,000-3,000}{5}[/tex]
[tex]\text{Depreciation expense}=15,000[/tex]
The book value as date of sale = [tex]78,000-(15,000\times4)=18,000[/tex]
The equipment was sold at the end of Year 4 for $8,000,
Therefore, the total loss = ($18,000-$8,000) = $10,000
Hence, a loss on sale is $10,000.
