1 of 1 Written Assignment # 4 Frank operates a construction business in Dallas,

Question

1 of 1 Written Assignment # 4 Frank operates a construction business in Dallas, Texas. On May 1, 2014, Frank purchased a warehouse for his business. The warehouse cost $500,000. In June 2014, Frank purchased some new equipment for the business. The equipment cost $200,000. Frank took $8,000 of depreciation on the warehouse in 2014 and $16,000 in 2015. Frank took $40,000 of depreciation on the equipment in 2014 and $80,000 in 2015. Frank decided to sell the warehouse and equipment so he could upgrade the business. He sold the warehouse for $550,000 and the equipment for $220,000 on December 31, 2015. What result to Frank?

Explanation / Answer

Warehouse Equipment Total Cost of acquisition 500000 200000 700000 Depreciation for 2014 and 2015 24000 120000 144000 Book value 476000 80000 556000 Sale value 550000 220000 770000 Gain on sale 74000 140000 214000

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