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# Answer to Question #196098 in Finance for Saiyyeda

Question #196098

Tullahoma Company purchased equipment for $27,500. It depreciated the equipment over a fiveyear life by the double-declining-balance method until the end of the second year, at which time the asset was sold for$8,500. Calculate the gain or loss on the sale at the end of the second year.Tullahoma Company purchased equipment for $27,500. It depreciated the equipment over a fiveyear life by the double-declining-balance method until the end of the second year, at which time the asset was sold for$8,500. Calculate the gain or loss on the sale at the end of the second year.

1
2021-05-21T11:42:19-0400

Double declining rate

"\\frac{100}{5}\\times2\n= 40%" %

Year 1

"\\frac{40}{100}\\times 27500\n=11000"

=$11000 Ending carrying value$27500 - $11000 =$16500

Year 2

"\\frac{40}{100}\\times 16500\n= 6600"

= $6600 Ending carrying value$16500 - $6600 =$9900

Loss of the sale at the end of Year 2

$9900 -$8500

= $1400 Answer=$ 1400

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