A piece of equipment is purchased by Great Notch Corporation on January 1 for $46,200. It is expected to have a useful life of four years after which it will have an expected residual value of $6,300. The company uses the straight-line method of depreciation for their equipment. If it is sold for $32,600 exactly two years after it is purchased, the company will record a: Multiple Choice gain of $7,250. gain of $6,350. loss of $6,350. loss of $7,250.

gain of $6,350.

Explanation:

Depreciation expense each year = (cost of asset - residual value) / useful life

($46,200 - $6,300) / 4 = $9,975

Depreciation expense after two years = $9,975 x 2  = $19,950

Value of the equipment in two years = $46,200 -  $19,950 = $26,250

If the equipment is sold for  $32,600, the equipment would be sold at a profit

Profit =  $32,600 - $26,250 = $6350

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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