CPA– 01235

Information

 
Question

CPA– 01235

Answer
The cost of the equipment will help us calculate the proceeds from the sale, but does not result in a receipt of cash.

The $18,000 is calculated as follows:

Cost of equipment $25,000
Accum. Dep $12,000
Net book value $13,000

Equipment was sold for a gain of $5,000
Therefore if we want to use algebra

X - $12,000 NBV = $5,000
X = $5,000 + $12,000
X = $18,000
So the gain is within the transaction of the change in investment activity

 
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