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Testbank Multiple Choice Question 122 On January 1, 2012, Bramble Corp. purchased for $768000, equipment having a useful life of ten years and an estimated salvage value of $36000. Bramble has recorded monthly depreciation of the equipment on the straight-line method. On December 31, 2020, the equipment was sold for $137500. As a result of this sale, Bramble should recognize a gain of

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Answer: $28,300

Explanation:

The gain that Bramble will recognize will goes thus:

First and foremost, we have to calculate the accumulated depreciation on the equipment and this will be:

= (768,000 - 36,000)/10 x 9

= 658,800

After that, we would find the value of the net Bmbook value on Dec 31, 2020 and this will be:

= 768,000 - 658,800

= 109,200

The gain will then be:

= Sales value - Net book value

= 137,500 - 109,200

= 28,300

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