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

FRANK CONSTRUCTION BUSINESS AMOUNT IN $ AMOUNT IN $ DATE OF PURCHASE MAY 1, 2014 JUNE, 2014 WAREHOUSE EQUIPMENT ORIGINAL COST 500000 200000 LESS: DEPRECIATION FOR THE YEAR 2014 -8000 -40000 NET VALUE (2014) 492000 160000 DEPRECIATION FOR THE YEAR 2015 -16000 -80000 NET VALUE (2015) 476000 80000 SELLING VALUE( 31ST DECEMBER 2015) -550000 -220000 GAIN ON SALE -74000 -140000 FRANK DECISION TO SELL WAREHOUSE AND EQUIPMENT HAS RESULTED INTO GAIN ON BOTH ASSETS AMOUNT IN $ AMOUNT IN $ WAREHOUSE EQUIPMENT SELLING PRICE 550000 220000 LESS NET VALUE -476000 -80000 GAIN ON SALE 74000 140000

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