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Determine the gain/loss on disposal of the equipment

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Question - One June 1, 2020, a company classified one if its equipment as held for sale. On this due date, the equipment has a fair value less cost to sell of 4.5 million. This equipment was acquired on May 1, 2018 for 6 million and is depreciated over its ten-year useful life using the straight-line method.

On December 31, 2020, the equipment held for sale has a fair value less cost to sell of 4.3 million.

On December 31, 2021, the equipment held for sale is still unsold but it still qualifies for recognition as held for sale. On this date, its fair value less cost to sell is 4.6 million. For the year 2021, the company recorded Sales for 10 million and operating expenses for 7 million.

On May 31, 2022, the equipment held for sale was sold for 4.15 million.

Required -

a. Determine the net income to be recognized in 2021?

b. Determine the gain/loss on disposal of the equipment in 2022?

Reference no: EM133179914

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