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If an asset is sold before the end of its useful life, what must be calculated?
If an asset is sold before the end of its useful life, what must be calculated?
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Practice Questions
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Q1
If an asset is sold before the end of its useful life, what must be calculated?
Book Value
Depreciation Expense
Market Value
Residual Value
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When an asset is sold before the end of its useful life, the Book Value must be calculated to determine any gain or loss on the sale.
Questions & Step-by-step Solutions
1 item
Q
Q: If an asset is sold before the end of its useful life, what must be calculated?
Solution:
When an asset is sold before the end of its useful life, the Book Value must be calculated to determine any gain or loss on the sale.
Steps: 6
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Step 1: Identify the asset that is being sold.
Step 2: Determine the original cost of the asset when it was purchased.
Step 3: Calculate the accumulated depreciation of the asset up to the point of sale.
Step 4: Subtract the accumulated depreciation from the original cost to find the Book Value of the asset.
Step 5: Compare the selling price of the asset to the Book Value.
Step 6: If the selling price is higher than the Book Value, there is a gain. If it is lower, there is a loss.
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