On Ist January, 1993, lobo Company purchased equipment for N18,000. it uses straight-line depreciation with an estimates eight-year useful life and a N2,000 salvage value. On 31st December, 1996, it sells the equipment for N8000. In recording this sales, it should reflect?
A. N10,000 loss B. N2,000 loss C. N6,000 gain D. N8,000 gain
Correct Answer: B
Explanation
equipment price = 18000 salvage value after 8 years useful life = 2000 If in 1996 ( 3 years later) it is sold for 8000, hence we have 18000 - 8000 = 10000 This means that, the quiptment was suppose to have been sold for 10,000 instead it was sold for 8,000. this shows a N2000 loss
